Asia report: Markets mixed as China's forex reserves top forecasts

Markets in Asia were mixed at the end of a relatively quiet day on Wednesday, with much attention on the Hong Kong debut of Chinese electric car manufacturer Xpeng.

In Japan, the Nikkei 225 was down 0.96% at 28,366.95, as the yen weakened 0.12% against the dollar to last trade at JPY 110.76.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.96%, fashion firm Fast Retailing lost 1.11%, and technology conglomerate SoftBank Group was off 0.62%.

The broader Topix index was off 0.86% by the end of trading in Tokyo, closing at 1,937.68.

On the mainland, the Shanghai Composite was ahead 0.66% at 3,553.72, and the smaller, technology-heavy Shenzhen Composite advanced 1.68% to 2,446.99.

Fresh data out of Beijing showed China’s foreign exchange reserves fell to $3,214bn in June, from $3,222bn in May, which was above consensus expectations for a figure of $3,200bn.

“We had looked for a lower print, with generalised weakness against the dollar meaning substantial negative currency valuation effects for foreign exchange reserves,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“Gains in the value of holdings of U.S. sovereign debt probably offset some of that.

“Still, these figures suggest that the authorities may have added to reserves last month, helping renminbi depreciate amid the wider selloff against the dollar.”

Beamish said China’s authorities had sent “clear signals” that they were uncomfortable with further appreciation for the yuan, and would continue to lean against any further pressure.

“The recently faster pace of recovery abroad, however, will start to turn the tide of underlying forces on the renminbi around the end of this year, however, helping the currency to depreciate.

“The chart shows that the People’s Bank of China probably was involved in tipping the currency lower last month, though positive valuation effects on US Treasury notes will also have boosted China’s foreign exchange reserves.”

South Korea’s Kospi was 0.6% weaker at 3,285.34, while the Hang Seng Index in Hong Kong was off 0.4% at 27,960.62.

China-based electric vehicle maker Xpeng closed flat in the special administrative region, having risen almost 2% after its debut at the open.

Seoul’s blue-chip technology stocks were weaker, with Samsung Electronics down 0.49% and SK Hynix 1.2% lower.

Oil prices were higher at the end of the Asian day, with Brent crude last up 1.4% at $75.57 per barrel, and West Texas Intermediate rising 1.55% to $74.51.

In Australia, the S&P/ASX 200 was up 0.9% at 7,326.90, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.09% to 12,747.80.

The down under dollars were stronger on the greenback, with the Aussie last ahead 0.25% at AUD 1.3309, and the Kiwi advancing 0.28% to NZD 1.4224.