Stocks

Soft Chinese Data Push Asian Shares Down

Asian shares dropped on Monday as new data showed China’s economy slowed down a bit during the second quarter, magnified by fears of a full-blown trade war between the United States and China.

 A shot of the shanghai stocks exchange doing business with asian shares

The official data showed that China’s economy grew 6.7 percent in the second quarter of this year, skidding from the 6.8 percent growth registered in each of the three previous quarters.

The gross domestic product (GDP) figures were in line with the expectations.  Even so, the new data also indicated a slower-than-expected growth in China’s industrial output.  This pointed to a slowing momentum and prompted some analysts to call for stronger government measures that could support growth.

Taken together, the data project an economy that is continuing to slow under the influence of a multi-year crackdown in excessive financial risk, even though trade war challenges accumulate.

However, Jim McCafferty, who is the head of equity research in Asia excluding Japan at Nomura, stated that China’s underlying economic data “appears to be quite robust.”

“I would be incredulous if China’s GDP growth could continue at the level it’s been historically.  So I think there’s always been an anticipation of some gradual slowdown, but the slowdown of the growth rate is probably less than the market really wants to believe,” said McCafferty.

He also said that worries over the trade war were dragging down markets.  The investors are being jittery due to the ratcheting up of trade war tensions.

“That’s why I think markets are nervous, because there’s no precedent for this type of behavior,” he stated.

MSCI’s broadest index of Asia-Pacific shares excluding Japan declined 0.3 percent after shortly moving higher on early gains in China’s share markets.

The Shanghai Composite index and the blue-chip CSI300 index went down 0.5 percent.

Hong Kong’s Hang Seng Index was down lower than 0.1 percent.  On the other hand, the China Enterprises Index took a larger blow, plummeting 0.6 percent.

Australian shares were lower 0.3 percent, while Seoul’s Kospi dropped 0.1 percent as shares in Taiwan were mostly flat.

Due to a holiday, Japan’s markets are closed.

The weak China data undermined a boost to sentiment from Friday’s gains on Wall Street, which were underpinned by strong profits industrial and energy companies.   The gains aided in offsetting investor concerns over the trade spat between the United States and China, which are the world’s two largest economies.

US stock futures reached a new five-month high on Monday.  S&P 500 e-mini futures, which are considered the world’s most liquid equity index futures, jumped 0.2 percent during the early Asian trade to reach their highest levels since February 2.

 

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