Asia report: Most markets fall as China exports come in hot for October

Most equity markets in Asia closed lower on Monday, with the exception of mainland China, after official data showed exports from that country leaping much higher than expected in October.

In Japan, the Nikkei 225 was down 0.35% at 29,507.05, as the yen weakened 0.04% against the dollar to last trade at JPY 113.45.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.55%, fashion firm Fast Retailing lost 1.9%, and technology conglomerate SoftBank Group was off 0.77%.

The broader Topix index was off 0.3% by the end of trading in Tokyo, closing at 2,035.22.

On the mainland, the Shanghai Composite was 0.2% firmer at 3,498.63, and the smaller, technology-heavy Shenzhen Composite was up 0.48% at 2,417.97.

Official data released over the weekend showed exports out of China were 27.1% higher year-on-year in October - significantly ahead of the 24.5% rise pencilled in by analysts polled by Reuters, although it was down from September’s growth of 28.1%.

Imports, however, were weaker than expected, growing by 20.6% year-on-year in October, up from the 17.6% expansion in September, but well short of consensus expectations for 26.2%.

The country’s trade balance jumped to $84.5bn for October, from $66.8bn in September, well ahead of the $64bn priced in by the markets.

“We had thought a slowdown in Chinese exports, and a fall in the trade surplus, was on the cards for October,” said Pantheon Macroeconomics chief China economist Craig Botham.

“September had already surprised on the upside, which we attributed to the reversal of port closure effects and a reliance on inventories to offset the impact of factory closures.

“We had thought exporters would struggle to meet demand in October, while rising energy imports should have squeezed the trade balance from the other side.”

Botham said seasonal factors offered some mitigation, with exports slowing slightly to 2.2% month-on-month on a seasonally-adjusted basis, while imports jumped to 5% month-on-month in October, from a previous 4% contraction.

As a result, the seasonally-adjusted trade balance did fall to $64.1bn from $68.9bn.

That, Craig Botham said, was consistent with Pantheon’s forecast narrative, although he said a “greater pullback” from exports was anticipated.

“Overall, the data challenges our assumption that trade would not provide much of a boost to growth in the fourth quarter,” he added.

“On a three months-on-three months seasonally-adjusted annual rate basis, exports are accelerating, and more rapidly than imports.

“While we still think trade alone will be insufficient to offset the drag from property and energy, it does provide an upside risk to our outlook.”

South Korea’s Kospi slipped 0.31% to end the day at 2,960.20, while the Hang Seng Index in Hong Kong was 0.43% weaker at 24,763.77.

The blue-chip technology stocks were on the front foot in Seoul, with Samsung Electronics up 0.57% and SK Hynix rising 0.47%.

Oil prices were higher at the end of the Asian day, with Brent crude last up 1.08% at $83.63 per barrel, and West Texas Intermediate 1.28% firmer at $82.31.

In Australia, the S&P/ASX 200 was 0.06% lower at 7,452.20, while across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.25% to 13,041.30.

The down under dollars were mixed against the greenback, with the Aussie last 0.04% weaker at AUD 1.3518, while the Kiwi strengthened 0.41% to last trade at NZD 1.4005.