Asia report: Markets mixed, China industrial profit growth slows

Markets in Asia finished in a mixed state on Thursday, as investors digested the latest industrial profits data out of China.

In Japan, the Nikkei 225 was down 0.33% at 28,549.01, as the yen weakened 0.02% against the dollar to last trade at JPY 109.17.

Of the major components on the benchmark index, robotics specialist Fanuc was down 1.34%, Uniqlo owner Fast Retailing was off 0.06%, and SoftBank Group dropped 2.2%.

The broader Topix index ended the session 0.5% weaker by the close in Tokyo, at 1,911.02.

On the mainland, the Shanghai Composite was up 0.43% at 3,608.85, and the smaller, technology-heavy Shenzhen Composite was 0.79% firmer at 2,399.27.

Fresh data out of Beijing showed industrial profits in the People’s Republic growing 57% year-on-year in April, slowing from the 92.3% surge in March.

Pantheon Macroeconomics chief Asia economics Freya Beamish said the bulk of the slowdown was due to unfavourable base effects, with adjusted profits still rising month-on-month, although at a slower pace than in March.

“Breakdowns reveal, however, that mining was the star performer, with month-on-month manufacturing profit rises slowing to their weakest pace in the recovery since the pandemic hit in the first quarter last year,” Beamish said.

“At the same time, manufacturing sales barely rose m/m, implying gains were carved out from a decline in costs.”

She noted that continued rises of input prices suggested a weakening in labour compensation.

“Going forward, further PPI inflation gains will help sustain profit margins, for now, while the US stimulus should also give a boost to sales, though labour costs trends should remain firm too.”

South Korea’s Kospi slipped 0.09% to 3,165.51, while the Hang Seng Index in Hong Kong was down 0.18% at 29,113.20.

Chinese smartphone giant Xiaomi was up 3.2% in the special administrative region, after the company reported 55% year-on-year growth in first quarter revenue.

Seoul’s blue-chip technology stocks were mixed, with Samsung Electronics down 0.25% and SK Hynix rising 2.03%.

Oil prices were lower as the region went to bed, with Brent crude last down 0.73% at $68.37, and West Texas Intermediate losing 0.76% to $65.71 per barrel.

In Australia, the S&P/ASX 200 eked out gains of 0.03% to 7,094.90, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.84% weaker at 12,243.34.

Both of the down under dollars were stronger against the greenback, with the Aussie last ahead 0.02% at AUD 1.2912, and the Kiwi strengthening 0.28% to NZD 1.3695.