Fresh fears about China’s crackdown on its tech sector dented optimism about the global recovery across Asia’s major trading floors on Thursday.
Wall Street provided a tepid lead, with equities extending a recent rally as investors looked to the release of key US jobs data later in the day.
But the upbeat mood changed across Asia after it emerged that Chinese regulators had summoned ride-hailing giant Didi Chuxing and 10 other car platforms to give them a dressing down in its latest move against tech firms which it sees as having too much power.
Officials demanded the firms, which also included the ride-hailing arm of major services app Meituan, cease “disorderly expansion” and “vicious competition” tactics.
They were told in a meeting on Wednesday that the industry was ridden with ‘poor behaviour’ including recruiting unqualified drivers and “shifting the risks of operations onto drivers”, the transport ministry said in a statement.
The firms were ordered to investigate internal problems and “immediately rectify” their poor behaviour, while ride-hailing platforms were also told to reduce the cut they take from transactions and protect passengers’ personal data.
The move follows a series of measures against Chinese tech firms as well as other sectors including private tuition, property and video games.
The news rattled investors and Hong Kong wobbled but closed up after briefly falling into negative territory.
The Hang Seng Index edged up 0.24%, or 62.14 points, to 26,090.43. The Shanghai Composite Index climbed 0.84%, or 29.94 points, to 3,597.04, while the Shenzhen Composite Index on China’s second exchange added 0.41%, or 9.88 points, to 2,427.77.
The Hang Seng Index as well as Shanghai’s composite index had been supported by the People’s Bank of China’s decision to provide tens of billions of dollars in low-cost funding to lenders to help them offer more support to small and medium-sized companies.
Tokyo, Shanghai, Wellington, Manila, Mumbai and Bangkok were also up but Sydney, Singapore, Seoul, Taipei and Jakarta fell.
The Nikkei 225 rose 0.33%, or 92.49 points, to 28,543.51, while the broader Topix index edged up 0.14%, or 2.78 points, to 1,983.57.
But there was still an air of confidence on trading floors, helped by Federal Reserve boss Jerome Powell last week indicating that while the bank intends to start tapering its ultra-loose monetary policy, it would do so cautiously.
He also suggested interest rates will remain at record lows for a period of time afterwards, though he gave no timeframe.
The release of US non-farm payrolls figures on Friday will be closely monitored, with some observers saying a strong reading could push the bank to start its pullback as soon as next month.
Data from private payrolls firm ADP on Wednesday showed far fewer posts were created last month than had been expected, weighed down by the fresh surge in coronavirus cases around the United States.
Investors were also looking past a spike in infections from the Delta coronavirus variant, which has forced some countries to impose lockdowns, and instead focus on the long-term recovery outlook.
“The market is fading Covid more as a risk in terms of really hampering economic activity,” Tracie McMillion, at Wells Fargo Investment Institute, said.
“We think the Fed is going to stick with their word and they will start tapering later this year. But we don’t think they are going to be in any hurry to raise interest rates.”
Oil prices were flat a day after slipping in reaction to OPEC and other major producers agreeing to lift output as the economy rebounds and demand is seen picking up.
Tokyo – Nikkei 225: UP 0.3% at 28,543.51 (close)
Hong Kong – Hang Seng Index: UP 0.2% at 26,090.43 (close)
Shanghai – Composite: UP 0.8% at 3,597.04 (close)
New York – Dow: DOWN 0.1% at 35,312.53 (close)
- AFP and Sean O’Meara