Asia report: Stocks rise despite big miss for Chinese exports

Stocks were in positive territory in Asia on Monday, led once again by Hong Kong’s bourse, even as fresh trade data out of China came in well short of expectations.

In Japan, the Nikkei 225 was up 1.21% at 27,527.64, as the yen strengthened 0.01% on the dollar to last trade at JPY 146.60.

Automation specialist Fanuc was up 1.55%, fashion firm Fast Retailing added 1.5%, and technology conglomerate SoftBank Group managed gains of 0.67%.

The broader Topix index was 0.98% firmer by the end of trading in Tokyo, settling at 1,934.09.

On the mainland, the Shanghai Composite managed gains of 0.23% at 3,077.82, and the technology-heavy Shenzhen Component was 0.18% firmer at 11,207.73.

After sentiment soared last week on swirling rumours of a looming relaxation of China’s strict Covid-19 measures, officials renewed and doubled-down on their current approach.

Health officials in Beijing said on Saturday that the People’s Republic would continue with its “dynamic clearing” approach to the virus, responding more precisely as soon as new cases emerge.

According to disease control official Hu Xiang, China’s current measures were “the most economical and effective” and correct at the current stage.

“We should adhere to the principle of putting people and lives first, and the broader strategy of preventing imports from outside and internal rebounds,” she said, according to Reuters.

Richard Hunter, head of markets at Interactive Investor, said markets lost steam as authorities in China denied they were considering easing their zero-tolerance Covid policy.

“Stocks had seen a strong bounce, with commodities in particular flying higher on hopes of increased demand, with copper, an accepted measure of global health, rising by 7% towards the end of last week.

“Despite the statement from the authorities, it is believed that the continuing weakness of the Chinese economy could yet prompt an easing of the policy in the New Year.”

Fresh data out of China showed dollar-denominated exports from the country flailing 0.3% year-on-year, while imports were 0.1% lower.

Both measures were well below expectations for a 4.3% rise in exports and a 0.1% improvement in imports, and marked the first declines since the early stages of the global pandemic in May 2020.

“Most major export sectors are experiencing falling shipments, as global demand weakens,” said Duncan Wrigley at Pantheon Macroeconomics.

“Exports of clothing, computers, healthcare products, furniture, lights and toys fell in year-over-year terms.”

Wrigley said expectations were for export growth to remain weak, due to slowing global growth as borrowing costs rose.

“Import growth will be pulled down by lacklustre domestic demand, as property construction is still feeble and China keeps the zero-Covid policy in place until at least March 2023.”

South Korea’s Kospi was 0.99% higher at 2,371.79, while the Hang Seng Index in Hong Kong jumped 2.69% to 16,595.91.

The blue-chip technology stocks were stronger in Seoul, with Samsung Electronics up 1.35%, and SK Hynix ahead 2.37%.

Oil prices were mixed at the end of the Asian day, with Brent crude futures last up 0.03% on ICE at $98.60 per barrel, and the NYMEX quote for West Texas Intermediate down 0.01% at $92.60.

In Australia, the S&P/ASX 200 was up 0.6% at 6,933.70, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was up 0.53% at 11.290.34.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.09% at AUD 1.5471, and the Kiwi retreating 0.21% to NZD 1.6897.

Reporting by Josh White for Sharecast.com.