Asia report: Markets mixed, China tech plays plunge on new guidelines

Markets in Asia closed in a mixed state on Wednesday, with Chinese technology plays among the leading losers after the announcement of new regulations on the industry.

In Japan, the Nikkei 225 was up 1.78% at 25,349.60, as the yen weakened 0.09% against the dollar to last trade at JPY 105.40.

Technology conglomerate SoftBank Group was down 2.47%, while among the benchmark’s other major components, automation specialist Fanuc was up 2.51% and fashion firm Fast Retailing rose 3.01%.

The broader Topix index was 1.66% firmer by the end of trading in Tokyo, finishing at 1,729.07.

On the mainland, the Shanghai Composite was down 0.53% at 3,342.20, and the smaller, technology-heavy Shenzhen Composite lost 1.94% to 2,263.96.

South Korea’s Kospi was ahead 1.35% at 2,385.87, while the Hang Seng Index in Hong Kong slipped 0.28% to 26,226.98.

The special administrative region’s primary airline, Cathay Pacific, was up 1.4% after plans for a travel bubble between Hong Kong and Singapore were confirmed.

In Seoul, the blue-chip technology stocks were both on the front foot, with Samsung Electronics up 1.83% and SK Hynix adding 0.58%.

Tech shares in Hong Kong were hit hard, meanwhile, with Alibaba down 9.8%, JD.com off 9.2%, Meituan falling 9.67% and Tencent 7.39% weaker.

Those moves came after the State Administration for Market Regulation in Beijing released its new draft regulations designed to put a lid on the monopolistic actions of internet-focussed firms.

“China and the EU are launching antitrust cases against big tech and the Biden administration could also get tougher in the new year,” noted SquaredFinancial chief market analyst Rony Nehme.

“These questions are putting the Nasdaq under pressure, with it falling a further 1.37% yesterday.

“We are watching this space to see if it could spark a broader risk-off move in foreign exchange.”

Positive Covid-19 pandemic developments were also at the fore of traders’ minds during the Asian session, as it was confirmed that quarantine-free travel between Hong Kong and Singapore would be permitted from 22 November.

That came on top of rosy sentiment carrying through from earlier in the week, when Pfizer and BioNTech reported positive results from its potential coronavirus vaccine tests thus far.

Oil prices were higher at the end of the Asian day, with Brent crude last up 3.46% at $45.12 per barrel, and West Texas Intermediate rising 3.55% to $42.83.

In Australia, the S&P/ASX 200 added 1.72% to 6,449.70, as the country’s major banks all advanced.

Australia and New Zealand Banking Group was up 3.17%, Commonwealth Bank of Australia added 2.76%, National Australia Bank was ahead 2.63%, and Westpac Banking Corporation advanced 1.96%.

All four have major subsidiary operations in New Zealand, where the central bank confirmed a new cheap lending programme for banks during its latest policy announcement.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was up 0.42% at 12,665.63, although logistics group Mainfreight was down 0.77% having earlier reached a major milestone.

The company had topped the NZD 60 per share price during the session, having reported a 23.4% improvement in gross profit, alongside an interim dividend.

It was the first stock to reach such a price on the Wellington bourse since New Zealand Refining managed it in the early 2000s.

On the monetary policy front, the Reserve Bank of New Zealand sated the expectations of the market, standing pat on its official cash rate at the record low of 0.25%.

It also made no changes to its ‘Large Scale Asset Purchases’ programme of quantitative easing, but did confirm that a ‘Funding for Lending’ programme would be launched in December.

That would allow banks access to cheap lending, based on the central bank’s official cash rate.

“The statement tried its best to keep a dovish tone, despite an improving outlook with a continued lean towards further stimulus and a willingness to overshoot targets as the path of least regret,” said Rony Nehme.

“[The] New Zealand dollar was rallying back hard on that, as expectations for negative rates next year are dialled back.”

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.16% at AUD 1.3704, and the Kiwi advancing 0.77% to NZD 1.4527.