Asian Markets at Close Report on May 6, 2016, by MarketWatch: China Stocks Slide Nearly 3% on Worries About Looming Bond Defaults.
The Shanghai Composite Index SHCOMP, -2.82% ended down 2.8%, while the smaller Shenzhen Composite Index sank 3.65%.
Elsewhere in Asia, Japan’s Nikkei Stock Average NIK, -0.25% closed lower by 0.25%, Hong Kong’s Hang Seng Index HSI, -1.66% sank 1.7%, while sank 1.7%, while Australia’s S&P/ASX 200 XJO, +0.24% eked out a 0.2% gain. Korea’s Kospi was closed in observance of a public holiday.
Trading was largely muted as investors waited for U.S. jobs data due late Friday in Asia. The report offers a glimpse of the health of the U.S. economy and is a key factor in swaying expectations for future interest-rate increases by the Federal Reserve. Economists estimate roughly 205,000 jobs were added in April.
Stocks in Asia ended on a tepid note for the week, which was highlighted by weaker China manufacturing data, volatile oil prices and Japan’s market being closed for three days.
Investors throughout Asia “are overly negative because they’re overly worried on China,” said Arthur Kwong, head of Asian equities for BNP Paribas Investment Partners.
Still, in China, stocks fell Friday amid worries about looming bond defaults and U.S.-listed Chinese companies that aim to first privatize and then go public back in China.
Inner Mongolia Nailun Group Inc., a fertilizer producer, said Thursday that it defaulted on its bonds because it was unable to meet interest and early redemption payments. Analysts said the default hurt sentiment in the stock market.
“The market still suffers from low confidence and is susceptible to any negative news,” said Zhang Gang, an analyst at Central China Securities. “Investors are mostly concerned about contagion risk emanating from a series of bond defaults.”
Traders were also focused on rumors that China’s securities regulator could suspend the process of Chinese firms that want to de-list their shares in the U.S. and re-list them in either Shanghai or Shenzhen.
More firms have recently been going public in China by combining with already-listed companies, also known as a “backdoor listing.” Shares of two takeover targets—CITIC Guoan Information Industry and Jiangsu Youli Investment Holding—sank 10% on Friday on concerns that such potential deals could be stalled.
The China Securities Regulatory Commission did not immediately respond to a request for comment.
In Japan, stocks pulled back despite the Japanese yen weakening slightly from an 18-month high against the U.S. dollar. A weaker local currency benefits exporters, as they can sell their goods at more competitive prices overseas.
Hong Kong shares fell on weakness in consumer goods and energy shares. Data late Thursday showed that Hong Kong retail sales slumped for the 13th straight month, while the number of tourists fell.
In other markets, volatile oil prices pressured energy shares in the region.
Rio Tinto Ltd. RIO, -0.65% fell 0.7% in Australia, and PetroChina 0857, -3.25% fell 3% in Hong Kong.
Brent crude rallied overnight, breaching $46 a barrel, but retreated during Asia trading hours and last traded at $44.59 a barrel.