Asia report: Hang Seng falters on disappointing China factory data

Asia-Pacific stock markets ended their trading sessions in the red on Wednesday, driven down by disappointing factory activity data from China.

Major indices recorded losses across the region, with Hong Kong's main bourse hitting a new low for the year.

“Most Asian equity markets traded lower as they took cues from a mixed handover from Wall Street,” said TickMill’s Patrick Munnelly.

“Investor sentiment was clouded by opposition to the US debt ceiling bill from hardliners, leading to subdued risk appetite ahead of the first vote in the House of Representatives later today.

“Additionally, market participants digested a series of data releases ahead of the month-end, including disappointing Chinese official PMIs.”

Equity markets in the red across the region

In Japan, the Nikkei 225 closed 1.41% lower at 30,887.88, while the Topix index fell 1.32% to 2,130.63.

Major trading companies Marubeni and Mitsubishi declined 6.46% and 6.01% respectively on Tokyo’s benchmark, while Mitsui slipped 5.31%.

Mainland China markets also suffered, with the Shanghai Composite down 0.61% at 3,204.56, and the Shenzhen Component falling 0.7% to 10,793.85.

Fujian Aonong Biological Technology and GEN S Power were among the biggest losers, each dropping by over 10%.

Hong Kong's Hang Seng Index slipped 1.94% to close at 18,234.27 points, marking its lowest close so far in 2023.

Notable decliners included PetroChina, down 5.42%; Meituan, falling 5.33%; and NetEase, which dropped 4.95%.

In South Korea, the Kospi index dipped 0.31% to close at 2,577.12, with Amorepacific and Hotel Shilla among the leading losses, dropping 4.83% and 4.1% respectively.

Australian markets also felt the impact, with the S&P/ASX 200 down 1.64% at 7,091.30, as Whitehaven Coal and Bank of Queensland led the decliners, losing 6.45% and 5.36% respectively.

The S&P/NZX 50 in New Zealand recorded a modest fall of 0.55% to 11,813.01, led lower by Pacific Edge and SkyCity Entertainment, which respectively dropped 5.56% and 4.76%.

On the currency front, the yen was last 0.06% weaker against the dollar to trade at JPY 139.88.

The down under dollars were also weaker against the greenback, with the Aussie last off 0.6% at AUD 1.5436, while the Kiwi retreated 0.7% to change hands at NZD 1.6660.

In commodities, oil prices edged lower, with Brent crude futures last down 1.35% on ICE at $72.55 a barrel, and the NYMEX quote for West Texas Intermediate falling 1.37% to $68.51.

China factory activity contracts more than expected, Japan retail sales slow

In economic news, China's recovery showed signs of faltering with a sharper-than-expected drop in factory activity.

The National Bureau of Statistics (NBS) reported that the manufacturing purchasing managers' index (PMI) slid to 48.8 in May, a five-month low, from 49.2 in April.

That also fell short of economist projections of a slight uptick to 49.4, and remained below the 50-point threshold that separates expansion from contraction.

Meanwhile, the non-manufacturing PMI and new order indices also recorded declines, signalling weaker demand across sectors.

“The Chinese recovery is faltering, especially the industrial sector, as China decided to allow a rebound in consumption to be the main driver of the reopening rebound, while holding off from broad stimulus,” noted Pantheon Macroeconomics.

“China’s ebbing industrial sector activity means diminished demand for inputs and raw materials, including from overseas.

“This reinforces our view that China will export disinflation, even deflation, to the world this year.”

In Japan, retail sales meanwhile demonstrated a slower growth rate, expanding 5% year-on-year in April, according to fresh official data.

That marked a considerable drop from the 7.2% increase seen in March, and significantly missed the 7% growth pencilled in by economists in Reuters polling.

Elsewhere, Australia’s headline inflation climbed to 6.8% in April - well beyond Reuters-polled predictions for inflation to be between 5.9% and 6.6%.

The Australian Bureau of Statistics put the unexpected rise down to substantial price increases in housing, with an 8.9% year-on-year increase, along with food and non-alcoholic beverages, and transport, which saw increases of 7.9% and 7.1% respectively.

Finally on the economici front, Thailand’s central bank raised its benchmark reverse repurchase rate to 2% from 1.75% in its latest decision.

It was the sixth consecutive rate increase since August last year, when the Bank of Thailand began its tightening cycle from a starting point of 0.5%.

Reporting by Josh White for Sharecast.com.

NIKKEI 225 -440.28 (-1.41%) 30,887.88

RISERS
Hino Motors +12.3% JPY 621.0
Kyocera Corporation +3.19% JPY 7,926.0
Ube Industries +2.64% JPY 2,255.0
Tokio Marine Holdings +2.44% JPY 3,144.0
Shionogi +2.21% JPY 6,276.0

FALLERS
Marubeni Corporation -6.46% JPY 1,992.0
Mitsubishi Corporation -6.01% JPY 5,586.0
Mitsui -5.31% JPY 4,404.0
Kajima Corporation -5.05% JPY 1,955.0
Kawasaki Kisen Kaisha -5.00% JPY 3,135.0

SHANGHAI COMPOSITE -19.65 (-0.61%) 3,204.56

RISERS
ArcSoft Corporation +13.28% CNY 50.51
Hainan Haiqi Transportation Group +10.02% CNY 21.20
Anhui Jiuhuashan Tourism Development Co +10.01% CNY 32.53
Arcplus Group +10.01% CNY 9.01
China Sports Industry +10.01% CNY 11.32

FALLERS
Fujian Aonong Biological Technology Group Incorporation -10.03% CNY 8.61
GEN S Power -10.03% CNY 9.15
Guangxi Guidong Electric Power Co -9.98% CNY 4.78
Dalian Thermal Power -9.95% CNY 5.70
Inner Mongolia Yitai Coal Co -7.53% CNY 1.29

HANG SENG INDEX -361.51 (-1.94%) 18,234.27

RISERS
SMIC +1.91% HKD 20.30
CK Infrastructure +0.93% HKD 43.30
Zhongsheng +0.87% HKD 28.90
BYD Co H +0.68% HKD 236.40
Nongfu Spring +0.6% HKD 42.00

FALLERS
PetroChina H -5.42% HKD 5.06
Meituan -5.33% HKD
NetEase -4.95% HKD 132.60
China Shenhua Energy Co H -4.44% HKD 24.75
CNOOC -4.23% HKD 11.78

KOSPI 100 -18.22 (-0.71%) 2,561.19

RISERS
Hanjinkal +8.55% KRW 50,800
BGF Retail +3.82% KRW 190,400
LG Energy Solution +3.28% KRW 559,000
Kepco +3.08% KRW 19,080
NH Invest +2.88% KRW 9,990

FALLERS
Amorepacific -4.83% KRW 104,500
Hotel Shilla -4.1% KRW 77,200
SK Holdings -2.84% KRW 167,800
Hyundai Steel -2.69% KRW 32,600
Hyundai Heavy Industries Co -2.68% KRW 116,100

S&P/ASX 200 -118.00 (-1.64%) 7,091.30

RISERS
Core Lithium +3.96% AUD 1.05
Mercury NZ +3.81% AUD 5.99
APM Human Services International +3.5% AUD 2.07
Telix Pharmaceuticals +3.36% AUD 11.70
Alumina +2.84% AUD 1.45

FALLERS
Whitehaven Coal -6.45% AUD 5.66
Bank of Queensland -5.36% AUD 5.47
SkyCity Entertainment Group -4.63% AUD 2.06
Premier Investments -4.44% AUD 22.41
Yancoal Australia -4.16% AUD 4.56

S&P/NZX 50 -65.70 (-0.55%) 11,813.01

RISERS
Oceania Healthcare +7.69% NZD 0.84
Eroad +6.15% NZD 0.69
Mercury NZ +5.47% NZD 6.56
Arvida +5.26% NZD 1.20
Summerset Group +2.36% NZD 9.12

FALLERS
Pacific Edge -5.56% NZD 0.425
SkyCity Entertainment Group -4.76% NZD 2.20
Fisher & Paykel Healthcare -4.4% NZD 23.25
Argosy Property -2.68% NZD 1.09
Meridian Energy -2.48% NZD 5.31