Asia report: Most markets lower as China-Korea tensions rise

Markets in Asia finished mostly lower on Wednesday, as traders began to close their wallets ahead of an expected rate hike from the US Federal Reserve next week, and geopolitical tensions in the Asia Pacific region continued to tighten.

Japan’s Nikkei 225 lost 0.47% to close at 19,254.03 - a third consecutive session of losses for Tokyo’s benchmark.

A fresh revision to Japan’s fourth quarter gross domestic product figure saw it rise to 1.2% growth from the preliminary reading of 1%, put down to the quickest growth in capital expenditure in the country for three years.

The yen was weaker against the greenback, last retreating 0.08% to JPY 114.07 per $1.

On the mainland, the Shanghai Composite closed down 0.04% at 3,241.18, and the smaller, technology-focussed Shenzhen Composite was off 0.36% at 2,024.28.

Official data released during the session showed exports rose 4.2% in renminbi-denominated terms year-on-year, while imports surged 44.7%.

That produced the rare phenomenon of a renminbi-denominated trade deficit.

Other data showed China’s foreign exchange reserves as rising against expectations for the first time in eight months in February.

The reserves reached $3.005trn during the month, after falling to $2.998trn in January.

“The rebound in reserves occurred in a backdrop of a weaker dollar across the board,” noted Mizuho Bank economist Chang Wei Liang.

“As such, it is by no means indicative that the capital flows situation has improved on China's merits alone.”

On the corporate front, cellphone and mobile equipment manufacturer ZTE reached a plea deal in the US, agreeing to plead guilty and pay $900m.

The firm had been accused of breaking US law by selling American technology to Iran.

In Hong Kong, the Hang Seng Index finished in the green, adding 0.43% to 23,782.27, while South Korea’s Kospi was also up 0.06% at 2,095.41.

Traders on the peninsula were still wary of the possibility the Constitutional Court could release its ruling on the impeachment of President Park Geun-hye imminently, over her cash-for-influence scandal which has rocked the country’s political establishment and the management structure of the Samsung Group conglomerate.

Geopolitical tensions were also top of the news in the region, with components for a US-commissioned Terminal High-Altitude Area Defence anti missile system arriving in South Korea.

The system’s construction sparked strong criticism from China, with the US State Department making attempts to assure China the THAAD system was not a threat, but a response to recent missile tests from a belligerent North Korea.

A number of South Korean companies operating in China had reported forced shop closures, fines and cyber attacks, with state-run media reportedly calling for Chinese to boycott South Korean goods and services.

Oil prices were lower during Asian hours, with Brent crude last down 0.4% at $55.70 per barrel and West Texas Intermediate losing 0.66% to $52.79.

Australia’s S&P/ASX 200 closed down 0.03% to 5,759.66, with the materials subindex suffering the heaviest losses at 0.81%.

In New Zealand, the S&P/NZX 50 added 0.1% to 7,178.23, in a session which kicked off late after the exchange suffered a technical glitch.

It was led higher by broadband infrastructure operator Chorus, which added 2.8% after it beat first-half profit expectations.

The down under dollars were both weaker against the greenback, with the Aussie last behind by 0.32% at AUD 1.3222 and the Kiwi off 0.15% at NZD 1.44 per $1.