Asia report: Most markets fall on growth forecasts, Brexit progress

Most markets in Asia finished lower on Wednesday, as investors digested fresh growth forecasts and continued to watch the latest developments on the Brexit front in Europe.

In Japan, the Nikkei 225 was up 0.34% at 22,625.38, with the country’s markets returning from a public holiday on Tuesday, as the yen strengthened 0.05% against the dollar to last trade at JPY 108.44.

Of the major components on the benchmark index, automation specialist Fanuc was up 0.12%, while fashion firm Fast Retailing slipped 0.36% and technology conglomerate SoftBank Group fell 2.51%.

SoftBank had struck a deal to take over the ailing US-based workspace company WeWork on Wednesday, in a deal that valued the latter at between $7.5bn and $8bn.

The broader Topix index was 0.59% higher by the close in Tokyo, ending its trading day at 1,638.14.

On the mainland, the Shanghai Composite lost 0.43% to 2,941.62, and the smaller, technology-heavy Shenzhen Composite slid 0.79% to 1,618.40.

South Korea’s Kospi was off 0.39% at 2,080.62, while the Hang Seng Index in Hong Kong was down 0.82% at 26,566.73.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics finishing flat, and chipmaker SK Hynix down 1.77%.

Apple supplier LG Display was down 2.07% at the close, when it reported a larger-than-expected quarterly operating loss amid falling prices for LCD panels.

Samsung Biologics also released its third quarter earnings in Seoul, with its operating profit surging 124.7% year-on-year.

Its shares were ahead 8.28% at the close, as investors digested reports that US pharmaceutical firm Biogen was preparing to place an order for its Alzheimer’s treatment.

The International Monetary Fund poured cold water on growth projections for the region on Wednesday, suggesting growth in Asia could fall to 5% in 2019 and 5.1% in 2020.

Those two projections were 0.4% and 0.3% lower than the IMF forecast in April, respectively.

Further afield, Boris Johnson’s Brexit deal hit another stumbling block overnight, as MPs voted against his accelerated timetable to push his withdrawal bill through the House of Commons.

That result meant it was almost certain that the United Kingdom would not leave the European Union on 31 October, with the prime minister now awaiting a response from Brussels to his extension request, which the law compelled him to send on Saturday evening.

“For markets at least, there is a feeling that a Boris Johnson driven no-deal scenario is less likely than ever,” said IG analyst Joshua Mahoney.

“However, with the threat of a Tory/Brexit Party coalition in the event of an election, a no-deal scenario remains a possibility.

“Given the threat of the EU’s arch nemesis Nigel Farage gaining a foothold into negotiations, it looks likely that the EU will grant a short extension that incentivises another push for this deal rather than a general election.”

Oil prices were lower as the region went to bed, with Brent crude last down 0.74% at $59.62 per barrel, and West Texas Intermediate off 0.06% at $53.91.

In Australia, the S&P/ASX 200 eked out gains of 0.01% to close its trading day at 6,673.10.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 dropped 2.1% to 10,853.79, with energy firms leading the losers amid concern for the future of the country’s largest single electricity customer, New Zealand Aluminium Smelters.

Anglo-Australia mining giant Rio Tinto, which owns a majority stake in the smelting operation at Tiwai Point, announced during the session that it was reviewing its ongoing viability amid a low price environment for aluminium globally.

Contact Energy was down 9.7%, Genesis Energy lost 6.1%, Mercury was off 8.4%, Meridian fell 8.7%, and Trustpower was 3% lower by the end of trading in Wellington.

It was not the first time in recent years Rio Tinto had dangled the prospect of closure over the smelter, with the firm securing a NZD 30m deal from the New Zealand government to remain operational in 2013.

The country’s energy minister Megan Woods said on Wednesday that no such deal would be offered this time around.

It was a mixed picture for the down under dollars, with the Aussie last 0.19% weaker against the greenback at AUD 1.4613, while the Kiwi strengthened 0.04% to NZD 1.5605.