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Apr 15, 2019

Asia trades mixed as investor confidence temper slightly despite better-than-expected China data

Key Points
  • Asia Pacific markets were mixed Monday afternoon, as investor confidence tempered midway, after Friday’s stronger-than-expected China data had improved risk sentiment. 
  • Investors will look for further signs of recovery in the Chinese economy in the series of economic data due to be released this week.
  • Customs data last week showed China’s March exports were higher than expected.The Japan Exchange Group logo is displayed on a glass door at the Tokyo Stock Exchange (TSE) in Tokyo, Japan.
Kiyoshi Ota | Bloomberg | Getty Images
Asia Pacific markets were mixed Monday afternoon, as investor confidence tempered midway, after Friday’s stronger-than-expected China data had improved risk sentiment.
In Japan, the Nikkei 225 rose 1.37 percent to 22,169.11. The Topix index was up 1.4 percent at 1,627.93.
South Korea’s Kospi retraced some of its morning gains to finish up 0.42 percent at 2,242.88. Shares of Asiana Airlines and its affiliates soared. Asiana Airlines shares were up 30 percent. Affiliates Air Busan and Asiana IDT rose 29.94 percent and 29.78 percent, respectively.
The top shareholder of Asiana Airlines, Kumho Industrial, said on Monday it would sell its entire stake in the debt-ridden carrier to keep it afloat, Reuters reported. That followed weeks of financial uncertainty after the carrier failed to win auditors’ sign-off on its 2018 financial statements, which triggered warnings of credit ratings downgrades, according to the Reuters report.
In China, shares reversed gains: The Shanghai composite fell 0.34 percent to 3,177.79 while the Shenzhen composite lost 0.84 percent to 1,723.9. Hong Kong’s Hang Seng index also gave up gains to trade near flat in late-afternoon trade.
Shares in Australia were muted as the benchmark ASX 200 index closed flat. Most sectors were lower while the energy subindex added 0.54 percent and the heavily weighted financial sector rose 0.39 percent.
“Stronger than expected China trade and credit data triggered a risk on move on Friday,” Rodrigo Catril, senior foreign-exchange strategist at the National Australia Bank, wrote in a morning note.
Customs data showed China’s March exports were higher than expected: Dollar-denominated exports rose 14.2 percent on-year, topping prediction of a 7.3 percent gain, according to a Reuters poll. Still, imports fell short of expectations, indicating domestic demand in the world’s second-largest economy remained weak.

Asia-Pacific Market Indexes Chart

NIKKEINikkei 225 IndexNIKKEI22169.11298.551.37
HSIHang Seng IndexHSI29810.72-99.04-0.33
ASX 200S&P/ASX 200ASX 2006251.400.100.00
KOSPIKOSPI IndexKOSPI2242.889.430.42
CNBC 100CNBC 100 ASIA IDXCNBC 1008213.1838.620.47
“A couple of hours later we had the big kicker with China’s credit data revealing a big jump in March,” Catril added. The better-than-expected data signaled a “substantial ramp up in credit in the economy. This means credit easing measures are kicking in quite hard and focus will now turn to March’s activity data.”
Investors will look for further signs of recovery in the Chinese economy, and its implication of global growth outlook. Last week, the International Monetary Fund again slashed its global economic growth forecast for 2019, citing risks such as increasing trade tensions and tighter monetary policy by the U.S. central bank.
Encouraging developments in the U.S.-China trade negotiations also added to the positive sentiment, according to Vishnu Varathan, head of economics and strategy at Mizuho Bank.
Last week, U.S. Treasury Secretary Steven Mnuchin said Washington and Beijing are making progress on a trade deal, which includes agreeing on an enforcement mechanism. Still, Mnuchin declined to say if the U.S. will use tariffs as an enforcement tool.
“Positive US-China trade developments, with Treasury Sec Mnuchin conceding grounds for ‘enforcement ... in both directions’ (where US had earlier demanded China give up its right to retaliation) arguably add to the tailwinds,” Varathan wrote in a Monday morning note.
In the currency market, the dollar index, which measures the greenback against a basket of its peers, traded at 96.859, dipping from levels above 97.000 in the previous week.
The Japanese yen, considered a safe-haven currency, traded at 111.91 to the dollar, strengthening from an earlier level around 112.09. The Australian dollar traded slightly lower at $0.7166.
Oil prices retreated during Asian hours on Monday amid concerns over global supply. U.S. crude fell 0.52 percent to $63.56 a barrel while global benchmark Brent was down 0.22 percent at $71.39.
Elsewhere, Indonesia heads to the polls this week on April 17.

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