Asian markets fall as investors digest China data; ZTE up 17%

Asian markets slipped on Monday as investors digested the release of a barrage of China economic data, shrugging off the gains seen stateside in the previous session.

The Shanghai composite declined 0.47 percent as investors digested the release of a barrage of economic data, including China’s second-quarter GDP growth of 6.7 percent which met expectations. That was a tad below the 6.8 percent growth seen in the previous quarter. The smaller Shenzhen composite was little changed, last lower by 0.04 percent.

The easing in growth came on the back of “softer global trade and the tightening of financial policy” since early this year, Oxford Economics’ Head of Asia Economics Louis Kuijs said in a note. “We expect growth in H2 to be challenged … (but) China’s most recent export data suggests that overall global demand momentum remains solid for now.”

Meanwhile, Hong Kong’s Hang Seng Index shed 0.17 percent, with property and materials stocks slumping, although some of those losses were offset by gains in the technology sector.

South Korean stocks traded lower, with the Kospi slipping 0.32 percent. Bank stocks declined, weighing on the broader index, but automakers climbed, with Hyundai Motor up 3.27 percent. In Australia, the S&P/ASX 200 edged down by 0.5 percent, with health care among the worst-performing sectors.

Meanwhile, markets in Japan are closed for a holiday on Monday.

MSCI’s index of shares in Asia Pacific excluding Japan slipped 0.37 percent in Asia afternoon trade.

The moves lower came despite gains on Wall Street in the previous session. The S&P 500 added 0.11 percent to end at 2,801.31, closing the session above the 2,800 level for the first time since Feb. 1. Other U.S. indexes also finished the day in positive territory.

Despite the broader increase stateside, bank stocks had dipped on Friday as markets digested the release of second-quarter earnings. Just over 5 percent of S&P 500 companies have reported second-quarter results so far. Analysts polled by FactSet expect second-quarter earnings to have grown by 20 percent.

Still, the overall gains came amid relief among investors over the lack of fresh, negative trade war headlines, according to analysts, with major U.S. indexes posting strong gains last week. A similar picture was seen in Asia last week, with markets finishing the week higher.

That had come after stocks initially slid following the Trump administration releasing a list of $200 billion in Chinese goods that could be subject to new tariffs, firing the latest shot in the trade dispute between the U.S. and China.

The announced duties will only take effect following a review process and come on the heels of U.S. tariffs on $34 billion in Chinese products taking effect earlier in the month.

Despite Monday’s slight declines and lingering anxiety on the trade front, some expect regional markets to head higher in the next quarter.

“If you look at particularly the Hong Kong, China market, most of the indicators that I look at are at oversold extreme. They’re at a level where I would look for the Hong Kong market … to try and find a base,” Mark Jolley, global strategist at CCB International Securities, told CNBC’s “Squawk Box.”

Unless the trade situation deteriorates significantly, which is seen as unlikely in the short term, Asian markets could see a relief rally in the next one to two months, Jolley said.

In currencies, the dollar index, which tracks the U.S. dollar against a basket of currencies, traded at 94.718 at 12:31 p.m. HK/SIN. Against the yen, the dollar traded at 112.46.

Apart from that, investors also awaited Federal Reserve Chairman Jerome Powell’s semi-annual congressional testimonies on Tuesday and Wednesday during U.S. hours.

In individual movers, telecommunications equipment maker ZTE got a boost after the U.S. removed a ban on the company from purchasing technology from U.S. corporations. Shares of ZTE listed in Hong Kong were up 17.32 percent while Shenzhen shares rose by the daily limit of 10 percent.

Meanwhile, shares of Xiaomi fell 2.33 percent after media reports that Chinese stock exchanges said the connect scheme linking Hong Kong and the mainland would not extend to firms with weighted voting rights structure.

That would mean that shares of Xiaomi will not be accessible to investors on the mainland under the connect programme.

Source: CNBC

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