Asia report: Markets mixed as Chinese tech plays plunge further

Markets in Asia finished in a mixed state on Tuesday, with Hong Kong’s main index sliding more than 4% for the second session in a row, amid an ongoing sell-off in China-focussed technology plays.

In Japan, the Nikkei 225 was ahead 0.49% at 27,970.22, as the yen strengthened 0.25% against the dollar to last trade at JPY 110.11.

Technology giant SoftBank Group was down 0.25%, while among the benchmark’s other major components, robotics specialist Fanuc rose 0.45% and Uniqlo owner Fast Retailing added 0.21%.

The broader Topix index advanced 0.64% by the end of trading in Tokyo, settling at 1,938.04.

On the mainland, the Shanghai Composite was down 2.49% at 3,381.18, and the smaller, technology-centric Shenzhen Composite was 3.33% lower at 2,331.43.

Fresh data out of Beijing showed industrial profits growth slowing to 20% year-on-year in June, from a 36.4% clip in May.

“The result was softer than we expected, suggesting that the impact of the Covid-generated disruptions in the south of China were more painful than previously thought,” said Pantheon Macroeconomics senior Asia economist Miguel Chanco.

“To be sure, the moderation in year-on-year growth was driven partly by the continued unwinding of favourable base effects from last year’s first quarter collapse.

“Nevertheless, profits in June undoubtedly were weak, dropping by 1.3% month-on-month, on our adjustment, erasing most of the 1.7% gain in May.”

Chanco said short-term trends in sales growth “cooled sharply”, chiming with the much smaller month-on-month increase in the producer prices index last month.

“That said, while PPI inflation appears to be nearing a peak, we reckon that its broad acceleration still has another leg up, keeping the headline rate relatively high in the second half of this year.

“Profit growth should also find some additional support from labour costs, which are likely to take a breather in the next few months, due to the softness in demand.”

South Korea’s Kospi managed gains of 0.24% to 3,232.53, while the Hang Seng Index in Hong Kong plunged 4.22% to 25,086.43.

Stocks in the special administrative region had now fallen more than 8% over two sessions, led by a sell-off in the technology sector, amid renewed concerns over regulatory clamp-downs from Beijing.

The latest move from Chinese authorities was the release of a new batch of rules for food delivery apps late on Monday, which included paying delivery workers at least the local minimum wage.

Seoul’s blue-chip technology stocks were on the back foot as well, with Samsung Electronics down 0.38% and SK Hynix losing 0.85%.

Oil prices were mixed as the region went to bed, with Brent crude last up 0.12% at $74.59 per barrel, while West Texas Intermediate slipped 0.07% to $71.86.

In Australia, the S&P/ASX 200 was up 0.5% at 7,431.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.65% to 12,590.31.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.31% to AUD 1.3591, and the Kiwi retreating 0.53% to NZD 1.4364.