Asia report: Stocks weaker, Evergrande surges on bank stake sale

Stock markets in Asia were mainly in the red at the close on Wednesday, although embattled property development giant China Evergrande rocketed in Hong Kong after it said it was selling a $1.5bn investment.

In Japan, the Nikkei 225 was down 2.12% at 29,544.29, as the yen strengthened 0.16% on the dollar to last trade at JPY 111.32.

Fashion firm Fast Retailing was up 0.52%, while among the benchmark’s other major components, automation specialist Fanuc was down 2.17% and technology giant SoftBank Group was 1.46% weaker.

The broader Topix index was off 2.09% by the end of trading in Tokyo, settling at 2,038.29.

On the mainland, the Shanghai Composite was 1.83% weaker at 3,536.29, and the smaller, technology-heavy Shenzhen Composite lost 2.29% to 2,347.16.

South Korea’s Kospi was 1.22% lower at 3,060.27, while the Hang Seng Index in Hong Kong was the region’s odd one out, managing gains of 0.67% to 24,663.50.

Shares in China Evergrande Group leapt 14.98% in the special administrative region, after the company announced the sale of a stake in Shengjing Bank, worth $1.5bn, to state-owned Shenjing Finance Investment Group.

The company’s debt issues were once again in focus, as another bond interest deadline fell due on Wednesday, following it missing a coupon payment worth $83.5m, due last Thursday.

Seoul’s blue-chip technology stocks were on the back foot, with Samsung Electronics down 2.42% and SK Hynix losing 3.38%.

“If investing is often about climbing a wall of worry, then market participants arguably face the equivalent of the Matterhorn right now,” said AJ Bell investment director Russ Mould.

“The global energy crisis is really just the latest manifestation of a wider shortage of stuff as demand has flooded back in the wake of the pandemic.

“Then you have specific pressure points like the crisis around Chinese property developer Evergrande, and the latest in what feels like a series of periodic battles over the debt ceiling in the US.”

Against that uncertain backdrop, Mould said central banks were having to weigh up inflation risks which, like chewing gum on the sole of a shoe, were proving stickier than hoped.

“To counter the threat posed by rising prices they face the prospect of dialling down economic support at a time of mounting uncertainty over the recovery.”

Oil prices were lower at the end of the Asian day, with Brent crude last down 0.54% at $78.66 per barrel, and West Texas Intermediate losing 0.64% to $74.81.

In Australia, the S&P/ASX 200 was down 1.08% to 7,196.70, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.41% at 13,119.79.

The down under dollars were weaker against the greenback, with the Aussie last 0.07% stronger at AUD 1.3807, while the Kiwi retreated 0.33% to NZD 1.4420.