Asian stocks hit by grim Chinese data, slowdown fears

TOKYO • Asian shares tumbled yesterday after China reported a set of weak data, fanning fresh worries of a slowdown in the world's second-biggest economy and leaving investors fretting over the wider impact of the trade dispute.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3 per cent, Japan's Nikkei dropped 2 per cent and Shanghai Composite closed down 1.5 per cent while Hong Kong's Hang Seng was off 1.6 per cent.

China's November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further, underlining rising risks to the economy as Beijing works to defuse a trade dispute with the United States.

A Chinese statistics bureau spokesman said the November data showed downward pressure on the economy is increasing.

The data "means that the worst is yet to come and policymakers will be very worried, particularly with consumption growth falling off a cliff", said Ms Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong.

The yuan weakened 0.15 per cent to the US dollar following the data.

"Although hopes of progress in US-China talks and cheap valuations are supporting the market for now, we have lots of potential pitfalls," said Mizuho Securities chief strategist Nobuhiko Kuramochi.

Overnight on Wall Street, the S&P 500 ticked down 0.02 per cent to 2,650, while the Nasdaq Composite dropped 0.39 per cent.

US corporate earnings due next month could throw a spotlight on the impact from the tariffs on imports from China, while there is risk of a government shutdown and further political stalemate in a divided US Congress, added Mr Kuramochi.

In the currency market, the pound's rally fizzled, as signs that the British Parliament was headed towards a deadlock over Brexit prompted traders to take profits from its gains made after Prime Minister Theresa May had survived a no-confidence vote.

The European Union has said the agreed Brexit deal is not open for renegotiation even though on Thursday, its leaders gave Mrs May assurances that they would seek to agree to a new pact with Britain by 2021 so that the contentious Irish "backstop" is never triggered.

The pound fell 0.4 per cent to US$1.26, on track to post its fifth consecutive week of losses. It was down 0.9 per cent so far this week.

The US dollar stood at 113.57 yen, flat on the day but above this week's low of 112.245 set on Monday.

The New Zealand dollar fell as much as 1 per cent to 69 US cents after New Zealand's central bank said it was considering almost doubling the required capital banks would need to hold to bolster the financial system's capacity to handle any shocks.

Oil prices gave up some of Thursday's gains following inventory declines in the US and expectations that the global oil market could have a deficit sooner than they had previously thought.

US crude futures edged down 0.6 per cent to US$52.27 per barrel and Brent crude slipped 0.8 per cent to US$60.94, after both gained more than 2.5 per cent on Thursday.

Cryptocurrency bitcoin fell as low as US$3,200, a fresh 15-month low.

A rash of bomb threats was e-mailed on Thursday to hundreds of businesses, public offices and schools across the US and Canada demanding payment in cryptocurrency, but none of the threats appeared credible, law enforcement officials said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 15, 2018, with the headline 'Asian stocks hit by grim Chinese data, slowdown fears'. Print Edition | Subscribe