Asia report: Stocks mixed, Hang Seng plunges after China data dump

Stocks were mixed in Asia at the close on Monday, after an avalanche of data was released in China, while the yen weakened even further against the dollar.

In Japan, the Nikkei 225 was up 0.31% at 26,974.90, as the yen weakened 1.15% against the dollar to last trade at JPY 149.35.

The yen’s Monday weakening came despite reports of an intervention from authorities in Tokyo on Friday, when it had strengthened sharply.

Automation specialist Fanuc was flat, while fashion firm Fast Retailing down 1.12% and technology conglomerate SoftBank Group 0.43% lower.

The broader Topix index was 0.28% firmer by the end of trading in Tokyo, settling at 1,887.19.

Fresh data out of Japan showed a slightly faster expansion in business activity in October, although inflationary pressures were still having an effect.

The au Jibun flash composite purchasing managers’ index (PMI) came in at 51.7 for October, up from 51.0 in September and above the 50-point level that separates expansion from contraction.

Services activity underpinned the growth, with that flash subindex coming in at 53.0, up from September’s final reading of 52.2, while the flash manufacturing PMI was still in contraction territory at 48.7, compared to 48.3 for the prior month.

“Latest flash PMI data has pointed to a further improvement in Japan’s private sector economy in October,” said Laura Denman, economist at S&P Global Market Intelligence.

“The recent easing in international border restrictions and the launching of the Nationwide Travel Discount Programme earlier this month boosted activity levels and order book volumes.

“The manufacturing sector, however, continued to struggle in the face of weak demand conditions and severe cost pressures.”

Denman said the rate of output price inflation rose to a fresh survey peak in October, as firms continued to share increasing cost burdens with their clients.

“With inflationary pressures remaining elevated across the private sector, business confidence dipped to a six-month low.”

On the mainland, the Shanghai Composite slid 2.02% to 2,977.56, and the technology-centric Shenzhen Component was 2.06% lower at 10,694.61.

Better-than-expected economic growth was the headline of a large data dump out of China on Monday, after a series of economic releases were delayed until after Beijing’s National Congress.

According to the data, gross domestic product (GDP) in the People’s Republic expanded 3.9% year-on-year in the third quarter.

That was better than the 3.3% rise pencilled in by economists, and was well ahead of the 0.4% print in the second quarter.

“The prospects of an immediate change in economic policy following the just-finished 20th Party Congress are slim,” said Duncan Wrigley at Pantheon Macroeconomics.

“President Xi Jinping’s work report evinced satisfaction with the results of zero-Covid policy in protecting human lives.

“The Shanghai Party Secretary Li Qiang was promoted to Politburo Standing Committee and is likely to be the next premier, despite the economic impact of the second quarter lockdown.”

Wrigley said policy support would continue to be focussed through infrastructure investment and manufacturing investment, especially by the state sector.

“The political transition continues until the National People’s Congress in March 2023, when government and state positions are announced.

“After the transition, officials will be in place for the next five years and more focussed on policy implementation rather than promotion prospects.

“This should mean better policy implementation, though the drags from zero-Covid policy and the property sector will continue as headwinds in the first half of 2023.”

On the industrial front, production expanded by 6.4% in September - well ahead of the 4.8% anticipated by markets, and hastening from August’s 4.2%.

Fixed asset investment, meanwhile, was up 5.9% in September, up from 5.8% in August by less than the 6% that had been expected.

Elsewhere, retail sales growth slowed to 2.5% for September, from August’s 5.4%, and failed to reach the 3% figure that had been widely expected.

New home prices fell, however, by 0.28% month-on-month, having slipped 0.29% in August.

Looking at trade, the country’s trade balance increased to $84.7bn for September, from $79.4bn in August and ahead of consensus expectations for $80.3bn.

Exports rose 5.7%, slowing from 7.1% in August but ahead of the 4% expected, while imports rose an unchanged 0.3%, above expectations for a flat reading.

South Korea’s Kospi was up 1.04% at 2,236.16, while the Hang Seng Index in Hong Kong tumbled 6.36% to 15,180.69.

The spiral downwards in the special administrative region was led by Chinese technology plays, with Alibaba Group down 11.42%, JD.com falling 13.17%, Meituan off 14.83%, and Tencent Holdings 11.43% lower.

Seoul’s blue-chip technology stocks were in the green, meanwhile, with Samsung Electronics up 2.86% and SK Hynix rising 1.44%.

Oil prices were lower at the end of the Asian day, with Brent crude futures last down 1.1% on ICE at $92.47 per barrel, and the NYMEX quote for West Texas Intermediate 1.27% weaker at $83.97.

In Australia, the S&P/ASX 200 added 1.54% to 6,779.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.46% to 10,782.36.

The down under dollars were both weaker against the greenback, with the Aussie last off 1.32% at AUD 1.5884, and the Kiwi retreating 1.09% to NZD 1.7585.

Reporting by Josh White at Sharecast.com.