Asia report: Chipmakers lead losses after US restricts exports

Stocks fell across the Asia-Pacific region on Monday, with chipmakers leading the losers in Hong Kong after fresh export rules were announced in the United States.

In Japan, traders were off for a public holiday, as the yen weakened 0.14% against the dollar to last trade at JPY 145.45.

On the mainland, the Shanghai Composite was down 1.66% at 2,974.15, and the technology-heavy Shenzhen Component slid 2.38% to 10,522.12.

Fresh data out of the private sector showed a contraction in China’s services activity in September, with the Caixin services purchasing managers’ index (PMI) coming in at 49.3 for the month.

That was a serious fall from its 55 reading in August, and took it below the 50-point level that separates expansion from contraction.

“Companies that reported reduced activity frequently commented that the pandemic and subsequent measures to contain the virus had restricted operations and weighed on demand in September,” Caixin said in its statement.

South Korea’s markets were closed for a holiday alongside Japan’s, while the Hang Seng Index in Hong Kong dropped 2.95% to 17,216.66.

China-based chip producers tumbled in the special administrative region, after the US Department of Commerce announced new export controls on certain high-end chips to the People’s Republic of China.

Hua Hong Semiconductor was down 9.4%, Semiconductor Manufacturing International Corporation slid 3.95%, and Shanghai Fudan Microelectronics Group tumbled 20.18%.

“Asian markets were downbeat on the general global picture, with trading thinned by holidays in Japan and South Korea,” said Interactive Investor head of markets Richard Hunter.

“China added to the gloom with a contraction in services activity, while its semiconductor index dropped sharply after the publication from Washington of sweeping export controls with particular emphasis on restricting Chinese participation.”

Oil prices were on the back foot at the end of the Asian day, with Brent crude futures last down 0.8% on ICE at $97.14 per barrel, and West Texas Intermediate off 0.8% at $91.90 on NYMEX.

In Australia, the S&P/ASX 200 lost 1.4% to 6,667.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 1.67% lower at 10,918.48.

The down under dollars were both weaker against the greenback, with the Aussie last off 1% at AUD 1.5844, and the Kiwi retreating 0.2% to NZD 1.7858.

Reporting by Josh White at Sharecast.com.