Asia report: Markets mixed, Evergrande firms soar in Hong Kong

Markets in Asia were in a mixed state on Wednesday, with shares in Chinese property developer China Evergrande and its affiliates in focus after it confirmed recent market chatter on possible divestments.

In Japan, the Nikkei 225 was up 0.65% at 28,070.51, as the yen weakened 0.17% against the dollar to last trade at JPY 110.76.

Technology conglomerate SoftBank Group was down 1.76%, while among the benchmark’s other major components, automation specialist Fanuc was up 0.66%, and fashion firm Fast Retailing jumped 2.12%.

The broader Topix index was ahead 0.92% by the end of trading in Tokyo, closing at 1,954.08.

On the mainland, the Shanghai Composite eked out gains of 0.08% to 3,532.62, and the smaller, technology-heavy Shenzhen Composite was 0.13% firmer at 2,487.00.

Fresh data on money supply in China showed M1 growth slowing to 4.9% year-on-year in July, from 5.5% in June and below consensus expectations for 5.4%, while M2 money supply growth slowed to 8.3% from 8.6% in June, also below forecasts for 8.7%.

The flow of aggregate financing, meanwhile slowed to CNY 1,060bn for the month, from a revised CNY 3,669bn and below consensus for CNY 1,700bn, while the flow of new renminbi loans slowed to CNY 1,080bn from CNY 2,120bn in June, falling short of the CNY 1,200bn expected.

“These numbers are disappointing across the board, and are likely to fuel calls for the People’s Bank of China to ease, especially following the quarterly review, which this week highlighted growth concerns,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“We continue to think, however, that the PBoC will respond with another 50bp RRR cut rather than a rate cut.

“This is not a normal cycle, and the relationship between M1 growth and activity in the real economy will be different.”

Beamish said there was still concern around near-term weakness.

“The current environment, with Delta spreading rapidly domestically, is not conducive to strong loan demand, but more importantly for the outlook beyond the current quarter, both households and corporates are already sitting on mounds of cash, so borrowing more is an unnecessary risk at this stage.

“The slowdown in M2 growth also was surprising, but it matters more for the two-to-three year outlook, and we’d be wary of the signal at this stage, in such an uncertain environment.”

South Korea’s Kospi was off 0.7% at 3,220.62, while the Hang Seng Index in Hong Kong rose 0.2% to 26,660.16.

Property development giant China Evergrande Group closed 7.84% higher in the special administrative region, after the company confirmed in a regulatory filing that it was in talks to offload stakes in some of its divisions, including China Evergrande New Energy Vehicle Group and Evergrande Property Services.

Those two stocks were in the green in Hong Kong as well, by 4.7% and 8.96%, respectively.

The blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 2.12%, and SK Hynix plunging 6.22%.

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.3% at $70.84 per barrel, and West Texas Intermediate rising 0.25% to $68.46.

In Australia, the S&P/ASX 200 was up 0.29% at 7,584.30, with energy plays among the leading gainers on the back of oil price growth.

Beach Energy was up 2.97%, Oil Search added 1.29%, Origin Energy advanced 3.76%, and Santos was 1.43% firmer.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.13% to 12,748.07, as it was dragged below the waterline by its largest constituent.

Medical technology company Fisher & Paykel Healthcare was 3.5% lower by the end of trading in Wellington, having rallied in recent sessions.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.26% at AUD 1.3643, and the Kiwi retreating 0.12% to NZD 1.4284.