Asia markets broadly lower after China trade data, STI down 0.7%

An investor chats in front of an electronic board showing stock information at a brokerage house in Beijing.
An investor chats in front of an electronic board showing stock information at a brokerage house in Beijing. PHOTO: REUTERS

HONG KONG (AFP) - Shanghai led most Asian markets lower on Tuesday (Sept 8) after Chinese data showed imports and exports sank in August, adding to fears about the world's number two economy that have convulsed global equities and sparked a flight to safe investments.

In Shanghai, investors - already reeling from a 40 per cent plunge in the market since June 12 - continued to sell-up. The city's composite index was 1.38 per cent lower by lunch, while Hong Kong was flat and Tokyo gave up 1.54 per cent.

The Straits Times Index was down 0.72 per cent at 2,831.87 as of 12:39 pm.

Analysts said the recent international market turmoil caused by worries over China - and uncertainty over US interest rates - had left investors nervous, with safe-haven assets such as the yen edging up and stocks retreating.

"While there are opportunities out there, there's no rush to pick the bottom at this stage given prevailing uncertainties over the slowdown in the Chinese economy and the timing of the US interest-rate increase," Tim Schroeders, a portfolio manager at Pengana Capital, told Bloomberg News.

"Investors probably want to sit tight and watch developments closely," he said.

News that Japan's economy had contracted less than expected was unable to provide a buying impetus in Tokyo, despite speculation the country's central bank will likely have to unveil fresh monetary easing measures, which usually supports stocks.

In Beijing the customs bureau said exports fell 5.5 per cent year-on-year while imports plunged 13.8 per cent.

While the export data was better than forecast and the import figure was affected by plunging commodity prices, the news is the latest to highlight weaknesses in the Chinese economy, which is a crucial driver of global growth.

On Monday, Beijing revised down its original reading for growth in 2014 to 7.3 per cent, its slowest rate in a quarter of a century.

Tuesday's result also comes despite a series of measures unveiled by authorities to halt a sharp slowdown in the economy, including five interest rate cuts since November and several reductions in the amount of cash banks must keep in reserve - each aimed at boosting lending.

And last month leaders surprised the world by devaluing the yuan, a move that sent shudders through financial markets.

"China is set to miss its export growth target for this year, and there will be no help from the external demand side for economic growth," said Liu Xuezhi, a Shanghai-based analyst at Bank of Communications Co, told Bloomberg News. "China's modest yuan devaluation has yet to show any effect on exporters."

Eyes are now on the release on Thursday of further data on inflation, retail sales and investment.

Stock markets have been convulsed for weeks by the endless run of weak economic data out of China, with trillions wiped off companies' values around the world on fears the country is heading for a "hard landing".

Adding to nervousness is the US Federal Reserve's looming decision on whether or not to hike interest rates - a move that would tighten borrowing costs and investment opportunities.

The central bank's call, expected later this month, has been muddied by the China crisis as well as a disappointing jobs report on Friday.

Japan on Tuesday said the world's number-three economy shrank less than expected in April-June, although analysts said the figures were unlikely to ease pressure on the central bank to widen its bond-buying stimulus, which effectively prints money.

While the 0.3 per cent contraction was better than the 0.4 per cent first announced and the 0.5 per cent forecast, Marcel Thieliant, Japan economist at Capital Economics, said "the details were hardly reassuring".

"The upward revision was mostly due to a larger contribution from stock building," he added. "We stick to our view that the Bank of Japan will step up the pace of easing at its end-October meeting."

Tokyo is struggling to kickstart growth, despite a vast spending blitz and monetary easing drive to light a fire under prices and end almost two decades of painful deflation.

Despite talk of more yen being pumped into financial markets, the Japanese unit was slightly higher with dealers reticent to buy riskier assets.

In Tokyo forex trade, the US dollar stood at 118.91 yen, compared with 119.34 yen in Tokyo Monday afternoon.