Asia report: Markets tumble as China's GDP growth misses

Stock markets in the Asia-Pacific region faced significant declines on Wednesday, as investor sentiment took a hit across the board.

Hong Kong's benchmark index led the declines, falling to its lowest level since November 2022.

“Asian stocks were under pressure due to the recent rise in yields and reduced expectations of Fed rate cuts,” said TickMill market analyst Patrick Munnelly.

“The Nikkei 225 initially rose due to a weaker currency but later dropped from three-decade highs as it succumbed to the risk-off sentiment.

“The Hang Seng and Shanghai Composite also retreated due to mixed Chinese economic data, with Hong Kong particularly underperforming due to losses in tech and property sectors.”

Markets form a sea of red across the region

In Japan, the Nikkei 225 and Topix both saw losses, down by 0.4% and 0.3% to 35,477.75 and 2,496.38, respectively.

Leading the losses on Japan’s main board were Tokyo Electric Power, down 4.53%; Fujitsu, off 4.07%; and Daiichi Sankyo, which was off 3.8%.

Mainland China markets also saw declines, with the Shanghai Composite falling 2.09% to 2,833.62, and the Shenzhen Component declining by 2.58% to 8,759.76.

Danhua Chemical Technology and Chongqing Dima Industry were among the biggest losers in Shanghai, closing down 8.97% and 7.47%, respectively.

Hong Kong’s Hang Seng Index suffered a substantial drop of 3.71% to close at 15,276.90, led lower by Alibaba Health Information Technology, down 8.57%; ENN Energy, which lost 7.31%; and Hang Lung, which finished the day 7.14% weaker.

South Korea's Kospi also experienced a downturn, dropping 2.47% to close at 2,435.90, with Hanmi Science and Hanwha Solutions among the notable casualties with falls of 11.3% and 9.54%, respectively

In Australia, the S&P/ASX 200 posted a minor loss of 0.29%, closing at 7,393.10, with Evolution Mining tumbling 17.33% and Bapcor sliding 6.25% by the end of trading in Sydney.

Across the Tasman Sea, New Zealand's S&P/NZX 50 index saw a marginal dip of 0.03% to 11,767.03, with Oceania Healthcare and Precinct Properties finishing down 4.05% and 3.1%, respectively.

On the currency front, the dollar was last 0.41% stronger on the yen, trading at JPY 147.80.

The greenback also gained some ground on the Aussie, rising 0.46% to AUD 1.5258, while it strengthened 0.31% against the Kiwi to change hands at NZD 1.6342.

In oil markets, both Brent crude and West Texas Intermediate (WTI) futures experienced declines, with the former last down 2.02% on ICE at $76.71 per barrel, and the latter losing 2.22% on NYMEX to $70.79, respectively.

Chinese economy grows slightly less than expected in fourth quarter

In economic news, China's National Bureau of Statistics announced the country's economy grew 5.2% in the fourth quarter of 2023.

While the growth was a positive sign, it fell slightly below economists' expectations of a 5.3% expansion, according to Reuters polling.

It brought the total growth for 2023 to 5.2%.

Alongside the data, the statistics bureau revealed that the urban unemployment rate for December stood at 5.1%, while the unemployment rate for individuals aged 16 to 24 remained significantly higher at 14.9%.

Beijing had temporarily suspended reporting the younger age group's unemployment rate earlier in the year to review its calculation methods, after it reached records above 20%.

“China’s GDP growth is likely to pick up in the first quarter from the fourth, as stimulus spending is deployed and consumption makes slow gains during the Chinese New Year holiday,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“More than CNY 800bn of the CNY 1trn fiscal stimulus for post-disaster reconstruction has been assigned to specific projects by end-year, and probably a chunk of that has already been transferred to local governments.

“The People’s Bank of China dished out CNY 350bn of PSL funding in December, out of CNY 500bn in additional quota for 2023 - this will go to urban village redevelopment, affordable housing, and select urban investment projects.”

Wrigley said that would primarily help upper-tier property markets, which contained the bulk of urban village stock, while lower-tier markets would likely continue to struggle.

“More fiscal and property sector support is likely in 2024, with monetary easing playing a support role, but don’t expect a mega-stimulus.”

In Japan, the monthly Reuters Tankan survey showed business sentiment among major manufacturers dipping in January for the first time in four months.

The sentiment index for manufacturers fell to +6 from +12 points in December, indicating a slight decrease in optimism.

Conversely, the service sector index rose to +29 in January, up from +26 in the prior month, reflecting improved sentiment in the service industry.

The monthly poll, tracking the Bank of Japan's key Tankan quarterly survey, calculates sentiment by subtracting the percentage of pessimistic respondents from optimistic ones.

Reporting by Josh White for Sharecast.com.