Market Close Apr 30

Recovery doubts halt rally

Investors pare positions ahead of long weekend in China, Japan; China tech sector rattled by regulator rebuke; oil extends fall as virus ravages India

Recovery doubts halts rally
Chinese factory PMIs fell in March. Photo: Reuters

(ATF Hong Kong): Asian markets retreated following disappointing China factory data and after Beijing ordered 13 internet platforms to comply with regulations, triggering concern there could be more crackdowns on the high-flying tech sector.

Earlier in the day, China reported its official manufacturing purchasing managers' index (PMI) fell to 51.1 in April from 51.9 in March, falling short of a Bloomberg consensus forecast of 51.8.

“We think China's manufacturing-sector recovery has peaked (PMI peaked in Nov), suggesting a moderate sequential slowdown in coming quarters. The softness in new-export orders also suggests exports will moderate from extremely high Q1 growth,” said Barclays economist Jian Chang.

Japan’s Nikkei 225 index retreated 0.83%, Australia’s S&P ASX 200 slipped 0.80%, Hong Kong’s Hang Seng index tumbled 1.97% and China’s CSI300 fell 0.79%. Regionally, the MSCI Asia Pacific index dropped 0.80%.

Investors were also paring positions ahead of the long weekend with China and Tokyo closed through Wednesday.

Tech sector

China’s tech sector was in focus after four of its biggest regulators widened an effort to rein in the country's massive internet "platform economy," which includes an antitrust clampdown backed by President Xi Jinping.

"At the same time, some financial services were running without licences, and there are serious rule violations in areas such as regulatory arbitrage, unfair competition and damaging consumers' interests," the People's Bank of China said in a statement.

Fitch Ratings said regulatory risk in China’s internet sector is likely to remain elevated.

“China’s stronger push for antitrust regulation in the internet sector will be costly to internet companies, albeit temporarily, as they may incur significant fines, reducing net cash positions and slowing down the pace of deleveraging,” said Kelvin Ho and Jia Wen, Fitch Ratings analysts in a note.

Tech giants Tencent, Alibaba and Meituan fell as much as 2-3% and were the most heavily traded on the Hong Kong Exchange.

Indian shortages

US Treasuries were flat and the US dollar edged up 0.2% to 90.8 against a basket of currencies.

Oil retreated amid concerns that recovery in many of the biggest oil-consuming nations was starting to lose momentum.

West Texas Intermediate crude declined 1% to $64.37 a barrel and Brent crude dipped 0.7% to $68.05 a barrel.

“The economic data for Q1 across many EMs look reasonably strong, but the latest COVID-19 outbreaks and the reintroduction of containment measures in some countries will weigh on underlying growth in Q2,” said Shilan Shah, economist at Capital Economics.

India, which ranks third in the world for oil consumption – accounting for about 4.6% of the world's total – has been overwhelmed by the Covid surge. Shortages of vaccine, hospital beds and medicine hinders India's mammoth efforts to beat the latest outbreak.

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index retreated 0.83%
  • Australia’s S&P ASX 200 slipped 0.80% 
  • Hong Kong’s Hang Seng index tumbled 1.97%
  • China’s CSI300 fell 0.79%
  • The MSCI Asia Pacific index dropped 0.80%

Stock of the day

Ganfeng Lithium shares rose as much as  % as the price of the commodity continued to recover after rising 11% in March. The company posted a sixty-fold rise in first-quarter profit as higher prices for the commodity used in electric-vehicle batteries added to bumper income from financial assets.