Asia report: Hang Seng plunges, Bank of Japan holds rates

Stocks were mostly lower in Asia at the close on Friday, with Hong Kong’s bourse falling to lows not seen in 13 years, as the Bank of Japan stood pat on interest rates.

In Japan, the Nikkei 225 was down 0.88% at 27,105.20, as the yen weakened 0.96% against the dollar to last trade at JPY 147.69.

Automation specialist Fanuc was down 5.47%, fashion firm Fast Retailing slipped 2%, and technology conglomerate SoftBank Group was 1% lower.

The broader Topix index was off 0.34% by the end of trading in Tokyo, settling at 1,899.05.

Markets had their expectations once again sated by the Bank of Japan earlier in the day, after policymakers left interest rates unchanged, with the short-term policy rate target held at -0.1%.

The central bank said it would also buy as many Japanese government bonds as necessary, at a fixed rate, to keep 10-year bond yields at its target of 0%.

“The bank will support financing, mainly of firms, and maintain stability in financial markets, and will not hesitate to take additional easing measures if necessary,” the BoJ said in its statement.

Duncan Wrigley at Pantheon Macroeconomics noted that the BoJ’s unanimous vote to maintain its easy monetary policy settings came despite rising inflation and downward pressure on the yen.

“In its statement, the central bank maintained its dovish tone - it expects short- and long-term policy interest rates to remain at their ‘present or lower levels’,” he said.

“The bank noted the impact of Covid-19 and said it would ‘not hesitate to take additional easing measures if necessary’ to support financing and ensure financial market stability.

“The meeting statement said that the BoJ would continue with the yield curve control policy until CPI ex-fresh food inflation exceeds 2% and stays above target in a ‘stable manner’.”

Before the interest rate decision, fresh data out of Tokyo showed unemployment in Japan creeping up to 2.6% in September, according to the Statistics Bureau.

That was a rise from 2.5% in August, which analysts polled by Reuters had expected to remain stable.

On the mainland, the Shanghai Composite slid 2.25% to 2,915.93, and the technology-heavy Shenzhen Component tumbled 3.24% to 10,401.84.

South Korea’s Kospi was 0.89% lower at 2,268.40, while the Hang Seng Index in Hong Kong plunged 3.66% to 14,863.06.

The benchmark index in the special administrative region was dragged down to levels not seen since 2009, with technology and electric vehicle plays leading the losses.

Alibaba Group closed down 4.78%, Bilibili slid 10.58%, Li Auto lost 10.87%, Meituan was 7.59% weaker, Tencent Holdings was off 5.82%, Xiaomi shrank 5.11%, and Xpeng plunged 14.89%.

The blue-chip technology stocks were in the red in Seoul as well, with Samsung Electronics down 3.7% and SK Hynix tumbling 7.33%.

Oil prices were in the red as the region entered the weekend, with Brent crude futures last down 0.9% on ICE at $96.09 per barrel, and West Texas Intermediate falling 1.29% to $87.93 on NYMEX.

In Australia, the S&P/ASX 200 was down 0.87% at 6,785.70, with miners and materials shares in the red after Fortescue Metals warned of inflation in labour and diesel leading to higher costs in its quarterly report.

Fortescue was down 8.15% by the end of trading in Sydney, while BHP Group lost 5.02%, BlueScope Steel fell 3.5%, Rio Tinto was off 4.37%, and Whitehaven Coal was 4.17% weaker.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region’s odd one out, managing gains of 0.26% to close at 11,129.53, led higher by casino operator SkyCity Entertainment, which added 3.33%.

The company reported a 10% uplift in first-quarter earnings, but did face a tense shareholder meeting during the day, with investors questioning the virtual nature of the meeting, as well as compliance investigations being launched into its casino in Adelaide, South Australia.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.64% at AUD 1.5598, and the Kiwi retreating 0.57% to NZD 1.7255.

Reporting by Josh White for Sharecast.com.