Asia report: Stocks weaker, house prices fall faster in China

Stock markets in Asia were mostly weaker at the end of trading on Wednesday, on the second day of the G20 meeting of 19 of the world’s biggest economies and the European Union in Indonesia.

In Japan, the Nikkei 225 managed gains of 0.14% to 28,028,30, as the yen weakened 0.12% against the dollar to last trade at JPY 139.45.

Automation specialist Fanuc was down 0.33%, while fashion firm Fast Retailing rose 0.36% and technology conglomerate SoftBank Group jumped 2.94%.

The broader Topix index was 0.05% weaker by the end of trading in Tokyo, settling at 1,963.29.

On the mainland, the Shanghai Composite was 0.45% lower at 3,119.98, and the technology-heavy Shenzhen Component lost 1.02% to 11,235.56.

Investment banking firm JPMorgan lowered its expectations for China’s economy earlier, saying it now expected gross domestic product to rise 2.9% in the People’s Republic this year, down from the 3.1% it had previously pencilled in.

Looking at 2023, JPMorgan said China’s economy would expand by 4%, down from its last forecast of 4.5%, with the outfit citing a “notable drag on domestic activity”, as well as a recent rise in Covid-19 cases.

On the data front in China meanwhile, new house prices fell faster in October, by 0.37% month-on-month, compared to the 0.28% slip recorded in September.

Duncan Wrigley at Pantheon Macroeconomics put the faster fall down to the strict enforcement of Covid measures before the annual National Congress, as well as uncertainty over the economic outlook keeping house buyer wallets closed.

“Second-hand home prices have fallen faster, leading to higher sales of second-hand homes than new homes in many markets,” Wrigley said.

“The new home market is bedevilled by confidence issues, as buyers worry whether part-built presale units will be completed by liquidity-strapped developers.”

Duncan Wrigley pointed to 16 liquidity-support measures for “high-quality developers” as a potential turning point for the market, however.

“Restoring buyer confidence that developers have the funding channels to complete presale units is the necessary condition for home sales recovery in China.

“This is a process that won’t happen overnight, but we expect visible improvement in 2023.

“The recovery cycle will be drawn out and uneven, with upper-tier cities and high-quality developers - both private and state-owned - taking the lead.”

South Korea’s Kospi slipped 0.12% to 2,477.45, while the Hang Seng Index in Hong Kong was off 0.47% at 18,256.48.

Technology and content giant Tencent Holdings closed up 2.22% in the special administrative region, as investors braced for an expected 0.5% fall in quarterly revenue in its results due later.

The firm recorded its first ever decline in revenue in the three months through June, with consensus expectations for the September period seeing a further fall to CNY 141.7bn (£16.81bn).

At the same time, Reuters cited sources as saying that Tencent was kicking off a fresh round of job cuts in its cloud, gaming and video streaming units.

Seoul’s blue-chip technology stocks were in a mixed state meanwhile, with Samsung Electronics up 0.48% and SK Hynix losing 0.11%.

Oil prices were in the green at the end of the Asian day, with Brent crude futures last up 0.71% on ICE at $94.53 per barrel, and West Texas Intermediate 0.44% firmer at $87.30 on NYMEX.

In Australia, the S&P/ASX 200 was down 0.27% at 7,122.20, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.08% to 11,230.55.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.29% at AUD 1.4757, and the Kiwi advancing 0.44% to NZD 1.6173.

Reporting by Josh White for Sharecast.com.