Asian markets extended a global equity selloff, as investor worries about aggressive monetary tightening were inflamed by strong US jobs data. Most markets were down, except for South Korea, which edged higher.
Shanghai stocks fell as more big cities tightened Covid curbs to combat fresh outbreaks, while sentiment was dented by data showing factory activity extended declines.
The Shanghai Composite Index was down 0.8% at the close, while the CSI 300 Index edged up 0.1%. The Hang Seng Index ended almost flat, while the Hang Seng China Enterprises Index added 0.4%.
The CSI 300 Index retreated 2.2% in August, while the Hang Seng Index slipped 1%.
China’s Guangzhou imposed Covid curbs in parts of the city, joining Shenzhen in battling local flare-ups, while several other big cities also tightened restrictions this week.
The official manufacturing PMI index rose to 49.4 in August from 49.0 in July but still remained in the contraction range, as new coronavirus infections, the worst heatwaves in decades and an embattled property sector weighed on production.
The new energy sector slumped 4.3% to lead the decline, with new energy vehicles and photovoltaic companies down 3.5% and 6.2%, respectively.
Shares in BYD, China’s largest electric car company, plunged more than 7% in Hong Kong and Shenzhen after Warren Buffett’s Berkshire Hathaway trimmed its stake, seven weeks after speculation it might sell its entire multi-billion dollar holding.
The resources index declined 3.3%, with energy down 2% and non-ferrous metal slumping 3.3%.
However, real estate developers rose 2%, while banks and food & beverage shares added roughly 1.8% each.
Coal shares shined in the month with a nearly 10% jump, as investors bet the country’s urgency to revive economic growth will override concerns about pollution to drive demand for fossil fuels and reliable energy.
Hong Kong shares of Alibaba declined roughly 1% on Wednesday, but the Hang Seng Tech Index finished up roughly 1% after opening down 2.5%.
Japanese Shares Track Lower
Japanese shares posted their second straight monthly gain, even as benchmark indexes closed lower for the day, weighed down by losses in heavyweight technology and energy firms and tracking Wall Street’s weakness overnight.
The Nikkei share average fell 0.4% to 28,091.53 while the broader Topix lost 0.3% to 1,963.16. For the month, the Nikkei gained 0.9% while the Topix added 1.2%.
US stocks extended losses to a third session on Tuesday, as a rise in job openings fuelled fears that the Federal Reserve has another reason to maintain its aggressive interest rate hike path to combat inflation.
“Japanese equities tracked Wall Street’s third-straight losing session, but gains in U.S. futures limited the decline,” said Maki Sawada, a strategist at Nomura Securities. “The impact of better-than-expected factory output data was limited.”
Data showed Japan’s factories extended expansion in output to a second month in July, as motor vehicle production improved, marking a positive start to the third quarter for manufacturers and broader economic activity.
Robot maker Fanuc lost close to 1% and Sony Group slipped 1.7%. Silicon wafer maker Shin-Etsu Chemical lost 1.1%.
Energy-related shares fell after oil prices dropped 5% overnight before recouping some of the losses in Asian trading hours on Wednesday.
KOSPI Rises on Chipmakers’ Gains, Foreign Inflows
South Korean shares reversed early losses to end higher, led by heavyweight chipmakers and strong foreign buying. The won rose 0.7% on the onshore settlement platform for its best day in three weeks, while the benchmark bond yield rose.
The benchmark KOSPI ended up 21.12 points, or 0.9%, at 2,472.05, after falling 1% in the early session. It also extended its monthly gain for a second month in August, rising 0.8%.
The Bank of Korea said there is a possibility of high inflation lasting longer than expected, while South Korea’s vice finance minister said FTSE Russell is likely to add South Korea to a watch list in coming weeks for inclusion in its World Government Bond Index.
Among heavyweights, technology giant Samsung Electronics rose 1.5% and peer SK Hynix gained 2.2%, leading the gains on the index. Battery maker LG Energy Solution fell 0.6%.
Airline shares jumped, with Korean Air Lines and Asiana Airlines rising 2.9% and 3.4%, respectively, as South Korea ends a requirement for Covid tests for inbound travellers.
Foreigners were net buyers of shares worth 208.7 billion won ($155.78 million) on the main board. For the month, they bought net 3.11 trillion won, their biggest buy since December 2021.
Indonesia’s GoTo Tumbles After Huge Loss
Shares of Indonesia’s largest tech firm PT GoTo Gojek Tokopedia fell on Wednesday by as much as 6.8%, a day after it reported heavy interim losses and warned of a volatile market outlook.
The company, which went public in April with a $1.1 billion stock sale, is seeking to raise a fresh $1 billion in the debt market, as deep losses threaten to stretch its financial health.
GoTo, formed last year by the merger of ride-hailing-to-payments firm Gojek and e-commerce leader Tokopedia, said on Tuesday its half-year net loss more than doubled to nearly $1 billion.
“We need to pay attention to the firm’s (cash) burn rate and how long it will continue,” said Maximilianus Nico Demus, an analyst at brokerage firm PT Pilarmas Investindo Sekuritas, while noting that revenue growth was strong but the pace of increases in marketing costs was faster.
Shares in GoTo fell to as low as 302 rupiah and were last down 6.2% at 304 rupiah. The company, backed by the likes of SoftBank Group, Alibaba and Singapore sovereign wealth fund GIC, has lost around 10% of its value since its IPO in April.
Australia Shares Slip
Australian shares also closed lower on Wednesday, with weaker underlying prices dragging mining and energy stocks down, but extended gains for a second consecutive month having finished the earnings-heavy month of August slightly up.
The S&P/ASX 200 index settled 0.2% lower at 6,986.8.
The benchmark rose 0.6% in August. Business results and profit forecasts for Australian companies during the season showed a divide, with big miners expecting higher profits on soaring commodities prices, while supermarkets, banks and manufacturers suffer from inflation and stagnant wages.
Weaker commodity and base metal prices from overnight trading flowed through to the materials and energy sectors. Energy stocks led the decline, falling 2.9% in their worst session since July 6. Woodside Energy fell 4.5%, recording its worst session in eight weeks.
Mining stocks also slipped, tracking weaker iron ore prices, with Fortescue Metals Group and BHP Group both falling 2.8%.
Technology stocks rose 1.4% and helped trim some losses. Buy now, pay later firm Zip Co Ltd surged 11.7%, recording its best session since August 2.
Markets in India were closed on Wednesday.
- Reuters with additional editing by Jim Pollard