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China Markets Hit 6-Year Lows, Nikkei Follows Wall St Rally

Investors have not been won over by Beijing’s piecemeal stimulus efforts while Japan’s rise continued unabated

Asian stocks enjoyed their best week of 2023.
A man watches stock quotations on an electronic board outside a brokerage, in Tokyo (Reuters).


Asian stocks saw a mixed end to the week with Japan’s Nikkei remaining in buoyant mood while China’s indexes slipped to six-year lows as the outlook remained gloomy for the world’s second biggest economy.

Tokyo’s benchmark share average rose after Wall Street closed sharply higher overnight but the headline story across the region was in China where Beijing’s policy support measures so far have failed to excite investors and bring a sustained rally.

“Investor sentiment has stagnated since last week’s temporary excitement about potential policy shift,” said Morgan Stanley in a note.


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The blue-chip CSI300 Index lost 1.18% and the Shanghai Composite Index fell 1.46%, or 40.59 points, to 2,730.15. The index was down 6.2% for the last five days, its biggest weekly decline since October 2018.

The Shenzhen Composite Index on China’s second exchange dropped 2.99%, or 46.05 points, to 1,491.70.

Shares in healthcare, information technology, securities and new energy slumped more than 2% each.

Hong Kong shares, meanwhile, rose slightly in earlier trade before U-turning despite a boost for its gaming firms after China approved licences for games by the social media giant Tencent.

Hong Kong’s Hang Seng Index lost 0.21%, or 32.65 points, to end at 15,533.56, and the Hang Seng China Enterprises Index fell 0.09%.

In contrast, Japan’s Nikkei share average rose as local investors scooped up stocks with robust outlooks and better shareholder rewards.

The Nikkei share average was up 0.41%, or 146.56 points, to close at 36,158.02, while the broader Topix was ahead 0.22%, or 5.64 points, to 2,539.68.

Aozora Bank tumbled for a second session, falling 15% to hit a three-year low. The Tokyo-based lender this week flagged its first annual net loss in 15 years as it took massive loan-loss provisions for US commercial property.


Disappointing Apple Sales

Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Taipei, Wellington, Manila, Bangkok and Mumbai also advanced, though Jakarta slipped.

MSCI’s broadest index of Asia shares outside Japan rose 1.2%, largely thanks to a 2.9% surge in South Korea where automaker shares were flying on chatter of a government push to nudge up undervalued stocks.

Quarterly results from Meta Platforms and amazon.com impressed US investors, with their shares surging 15% and 7% in after-hour trading, respectively, adding a combined $280 billion in stock market value. 

Apple, however, fell 3% after the close on disappointing China sales. The tech rally looked set to spill over to European markets, with Eurostoxx 50 futures up 0.8%. Nasdaq 100 futures extended gains to be up 1% while S&P 500 futures rose 0.6%.

Investors are now waiting for US payrolls data later in the day. Economists expect the US economy added 180,000 new jobs in January, which would be a slowdown from December and perhaps begin to make a case for Federal Reserve interest rate cuts sooner rather than later.

Weaker payroll data could bring a March rate cut back into play. Markets still see a chance of a March move at about 40%, while pricing 32 basis points (bps) of cuts for May – implying a 100% probability of 25 bps and some chance of a 50 bp easing.


US Dollar Under Pressure

Reflecting the still sizeable cuts expected to come this year – about 145 bps are priced in – and renewed jitters over regional US banks adding to safe-haven demand, longer-term Treasuries are headed for the best week since mid December.

Ten-year treasury yields rose 2 bps to 3.887%, but were still down a whopping 27 basis points for the week. The rate-sensitive two-years were also up 2 bps at 4.2186%, but down 15 bps on the week.

The slide in yields pressured the US dollar, which fell 0.5% overnight against its peers and on Friday stuck to the low end of its recent range at 103.03.

The euro was buoyant at $1.0877, having firmed 0.5% overnight after data showed underlying price pressures in the euro zone were still strong.

Sterling was perched at $1.2745, having rallied 0.5% overnight after the Bank of England said it would tread carefully about rate cuts.

In energy markets, oil prices recouped some losses from the previous day following a decision by OPEC+ to keep its oil output policy unchanged, though they are still headed for weekly losses.


Key figures

Tokyo – Nikkei 225 > UP 0.41% at 36,158.02 (close)

Hong Kong – Hang Seng Index < DOWN 0.21% at 15,533.56 (close)

Shanghai – Composite < DOWN 1.46% at 2,730.15 (close)

London – FTSE 100 > UP 0.48% at 7,658.68 (0933 GMT)

New York – Dow > UP 0.97% at 38,519.84 (Thursday close)


  • Reuters with additional editing by Sean O’Meara


Read more:

Asian Rivals Posing a Challenge to Apple’s iPhone Sales in China

China Asks Local Governments Not to Use Tech Funds to Pay Debt

US Firms See Better Prospects in China But Will Hold Investment

Hang Seng Rallies on Policy Bets, Nikkei Slips on Fed Warnings



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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