Asia report: Markets mixed as Chinese GDP beats forecasts

Asia-Pacific markets finished with a mixed performance on Wednesday as investors digested robust economic data from China.

According to China’s National Bureau of Statistics, the nation’s economy posted a surprising 4.9% growth in the July to September quarter compared to last year, surpassing expectations of 4.4%, as per Reuters polling.

“Asian stocks displayed a mixed performance, influenced by escalating tensions in the Middle East ahead of US President [Joe] Biden’s visit to Israel,” said TickMill market analyst Patrick Munnelly.

“The cancellation of scheduled meetings with the Palestinian president and Arab countries added to the geopolitical uncertainty.

“In economic news, China reported a robust 1.3% quarter-on-quarter increase in third quarter GDP, surpassing expectations and resulting in a 4.9% year-on-year growth rate, which exceeded the consensus forecast of 4.5%.”

Munnelly noted that oil prices experienced an upward trajectory while Treasury bond yields remained relatively stable overnight.

“This stability followed a previous uptick in yields, which had been driven by strong US data, including encouraging figures from the retail sales sector.”

Regional bourses finish mixed after better-than-expected China data

In Japan, the Nikkei 225 edged up by a modest 0.06% to close at 32,042.25, while the Topix index recorded a 0.14% gain, closing at 2,295.34.

Notable gainers on Tokyo’s benchmark included Keisei Electric Railway, up 7.76%; Sumitomo Dainippon Pharma, rising 4.6%; and Inpex, ahead 4.52%.

Meanwhile, China’s markets experienced some pressure, with the Shanghai Composite declining by 0.8% to 3,058.71 and the Shenzhen Component dropping 1.24% to 9,816.68.

Inesa Intelligent Tech A and Inesa Intelligent Tech B were among the notable decliners in Shanghai, falling by 9.99% and 7.44%, respectively.

In Hong Kong, the Hang Seng Index slipped by 0.23% to 17,732.52, with Lenovo Group down 10.12% and WuXi Biologics facing notable losses of 5.39%.

South Korea’s Kospi index achieved a 0.1% gain, closing at 2,462.60.

Among the companies in the green were Hanjinkal, up 8.15%, and Mirae Asset Daewoo, which closed 4.49% higher.

Australia’s S&P/ASX 200 index rose by 0.3% to 7,077.60, driven by solid performances from Whitehaven Coal, up 11.49%, and Genesis Minerals, ahead 7.34%.

In New Zealand, the S&P/NZX 50 inched up by 0.06% to 11,221.48, with KMD Brands up 2.41% and Heartland Group contributing to the gains with a 2.34% rise.

In currency markets, the dollar was last down 0.02% against the yen, trading at JPY 149.78.

The greenback slipped 0.19% on the Aussie to AUD 1.5669, and it decreased 0.09% against the Kiwi to change hands at NZD 1.6937.

In oil markets, Brent crude futures were last up 2.18% on ICE to reach $91.86 per barrel, while the NYMEX quote for West Texas Intermediate added 2.4% to settle at $88.74.

China’s economic growth exceeds expectations in the third quarter

In economic news, China showed resilience in the third quarter of the year, posting year-on-year economic growth of 4.9% in fresh data on Wednesday.

While surpassing expectations, the figure fell short of the 6.3% expansion recorded in the second quarter.

Economists polled by Reuters had anticipated a more modest 4.4% growth for the third quarter.

Encouraged by the performance, economists at Nomura revised their full-year growth forecasts for China and now projected year-on-year GDP growth of 5.1%, up from their earlier estimate of 4.8%.

Fourth-quarter GDP estimates were adjusted to 4.7%, up from 4.3%.

However, the Japanese investment bank issued a note of caution, warning that it may be premature to assume the worst was behind.

It said pent-up demand for travel during the recent eight-day Golden Week holiday could wane while the property sector’s full recovery remained elusive.

“China has probably done enough to ensure official GDP growth hits the ‘about 5%’ target for 2023, despite the feeble property sector, falling exports and people’s worries about their income prospects,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“The perception of the economy rebounding is likely to buttress private sector confidence, as evidenced by the drop in the household saving rate and green shoots in private business profits and investment.

“Private sector fixed asset investment edged up 0.1% year-on-year in September, after dropping 2.2% in August, and the first rise since March.”

Wrigley noted that President Xi Jinping struck a supportive tone for private firms during his trip to Jiangxi Province this week, adding to the “markedly pro-business stance” of Premier Li.

“China still faces structural headwinds, such as local government debt issues, high youth unemployment and access to high-tech chip technology.

“But these should be weighed against its competitive edge in green energy and electric vehicles, as well as gains made in less advanced chip production and other hard-tech sectors.

“China’s recovery is likely to continue in 2025, supported by dollops of targeted support, as it seeks new industrial engines to replace a smaller property sector.”

Elsewhere in data, China’s retail sector experienced growth in September, with retail sales rising by 5.5%, surpassing the estimated 4.9% increase according to economists surveyed by Reuters.

Additionally, the urban unemployment rate declined, reaching a near two-year low of 5% in September, down from the August reading of 5.2%.

Reporting by Josh White for Sharecast.com.