Asia Pacific Shares Mixed: Violence Pressures Hang Seng, Weak Data Drives Shanghai, Nikkei Lower, Aussie Stocks Rise on Rate Cut Hopes

James Hyerczyk

The major Asia Pacific stock indexes finished mixed the week-ending November 15 with shares rising in South Korea and Australia, but losing ground in Hong Kong, Japan and China. U.S.-China trade relations dominated the news, but the price action was also influenced by escalating violence in Hong Kong and weak economic data in the region.

Last week, in Japan, the Nikkei 225 Index settled at 23303.32, down 88.55 or -0.38%. Hong Kong’s Hang Seng Index closed at 26326.66, down 1324.48 or -4.79% and China’s Shanghai Index finished at 2891.34, down 72.84 or -2.46%.

South Korea’s KOSPI Index settled at 2162.18, up 24.95 or +1.17% and Australia’s S&P/ASX 200 Index finished at 6793.70, up 69.60 or +1.04%.

Hong Kong Violence Escalates

Protests in Hong Kong drove the Hang Seng Index down 4.79% last week with a violent turn Monday, heightening an already volatile situation days after a group of pro-democracy lawmakers was arrested in the city.

In one incident, a Hong Kong protester is in critical condition after being shot by police. In an unrelated incident, police said “rioters” poured “flammable liquid” on a man and set him on fire.

The latest mass demonstrations come after three pro-democracy lawmakers were arrested on November 9 and reports indicated that other were warned they soon could be taken into custody.

Japan’s Economy Grinds to Near Standstill

The Nikkei was pressured by a report that showed growth in Japan’s economy ground to a near standstill in the third quarter, at its weakest in a year, as the U.S.-China trade war and soft global demand knocked exports and kept pressure on policymakers to ramp up stimulus in order to bolster a fragile recovery, according to the Japan Times.

Private consumption also cooled from the previous quarter, casting doubt on the Bank of Japan’s view that robust domestic demand will offset the impact from intensifying global risks.

In the third quarter the world’s third-largest economy grew an annualized 0.2 percent, slowing sharply from a revised 1.8 percent expansion in April to June, according to preliminary gross domestic product data released by the government Thursday.

It fell well short of a median market forecast for a 0.8 percent gain, and marked the weakest growth since a 2.0 percent contradiction in the July-September period last year.

China’s Economy Weakens as October Indicators Miss Forecasts

China’s industrial output grew significantly slower than expected in October, as weakness in global and domestic demand and the drawn-out Sino-U.S. trade war weighed on activity in the world’s largest economy.

Industrial production rose 4.7% year-on-year in October, data from the National Bureau of Statistics released on November 14 showed, below the median forecast of 5.4% growth in a Reuters poll.

Indicators showed other sectors also slowing significantly and missing forecasts with retail sales growth back near a 16-year trough and fixed asset investment growth the weakest on record.

Other data showed China’s property investment growth in the first 10-months of 2019 slowing year-on-year. Fixed asset investment, a key driver of economic growth, grew 5.2% from January-October, against expected growth of 5.4%. The January-October growth was the lowest since Reuters records began in 1996.

Private sector fixed-asset investment, which accounts for 60% of the country’s total investment, grew 4.4% in January-October. Retail sales rose 7.2% year-on-year in October, missing expected growth of 7.9% and matching the more than 16 year low hit in April.

Aussie Shares Rise

Shares in Australia were unpinned last week after disappointing October jobs data raised the chances of another rate cut by the Reserve Bank of Australia (RBA) in the coming months. The surprise report caused the Australian Dollar to fall 0.6 percent, while the Australian 10-year bond dipped 9 basis points to 1.179 percent.

The fall in yields pushed investors into bond proxies and high-growth stocks, with technology companies among the market’s best performers.

Australian shares were pulled higher throughout the week while the major U.S. stock indexes hovered near record highs. The gold mining sector also provided some support as investors sought the safe-haven allure of the precious metal amid uncertainty about a Sino-U.S. trade resolution.

This article was originally posted on FX Empire