Asia report: Tech stocks lead gains, China property sector stalls
By Josh White
Date: Wednesday 20 Oct 2021
(Sharecast News) - Equity markets were mixed on Wednesday in Asia, with Hong Kong shares rising strongly as Chinese technology names rose across the board.
In Japan, the Nikkei 225 was up 0.14% at 29,255.55, as the yen weakened 0.07% against the dollar to last trade at JPY 114.46.
Automation specialist Fanuc was down 0.16%, while among the benchmark's other major components, fashion firm Fast Retailing was up 0.63% and technology conglomerate SoftBank Group jumped 4.4%.
The broader Topix index eked out gains of 0.05% by the end of trading in Tokyo, closing at 2,027.67.
On the mainland, the Shanghai Composite was down 0.17% at 3,587.00, and the smaller, technology-heavy Shenzhen Composite was 0.11% weaker at 2,420.04.
The People's Bank of China kept interest rates steady in its latest decision on Wednesday, with the one-year loan prime rate held at 3.85% and the five-year rate at 4.65%.
Analysts and traders had expected the central bank to make no change according to a Reuters poll.
"Rate cuts would probably do little to help property developers, and could add to pressure on banks," said Pantheon Macroeconomics chief China economist Craig Botham.
"More helpful is increasing the willingness of banks to lend - essentially to evergreen property developer credit - which the PBoC has been achieving so far through moral suasion.
"We continue to expect, however, a reserve ratio requirement (RRR) cut this quarter, as pressures will continue to mount, and bank losses start to rise."
Data on the country's property sector, meanwhile, showed new house prices seeing their first monthly decline in six years, while second-hand homes began to decline last month, before falling further in September, by 0.19% month-on-month.
"This provides further evidence of property market weakness in the wake of tighter government policy and the multiple defaults by assorted property developers," Craig Botham said.
"Falling prices threaten collateral values, developer and local government revenues, and consumer confidence, so the risk of contagion is building."
South Korea's Kospi was off 0.53% at 3,013.13, while the Hang Seng Index in Hong Kong jumped 1.35% to 26,136.02.
Chinese technology stocks were well above the waterline in the special administrative region, with Alibaba rocketing 6.67%, Meituan ahead 2.87% and Tencent 2.1% firmer.
The gains came after it was reported that Alibaba founder Jack Ma was travelling Europe, having remained out of the public eye for several months after criticising Beijing regulators.
China-based property names were mostly weaker, meanwhile, with China Vanke down 0.71% and Country Garden losing 0.64% in Hong Kong.
That came following the house price data in mainland China, and after it was reported that debt-plagued developer China Evergrande had put the kibosh on plans to sell a majority stake in its property services division.
The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 0.42%, while SK Hynix rose 0.2%.
Oil prices were lower at the end of the Asian day, with Brent crude last down 0.85% at $84.36 per barrel, and West Texas Intermediate off 0.97% at $81.48.
In Australia, the S&P/ASX 200 added 0.53% to 7,413.70, while across the Tasman Sea, New Zealand's S&P/NZX 50 was ahead 0.37% at 13,114.24.
Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.19% at AUD 1.3354, and the Kiwi advancing 0.11% to NZD 1.3963.
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