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Sunday, June 20, 2021
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China stocks rise despite slow growth

China stocks

Fresh data out of China showed an easing of growth last month, with industrial output rising 9.8% in April from a year earlier, versus March’s 14.1% rise

Asian stocks saw a mixed session on Monday, with Chinese stocks rising despite data showing the pace of growth slowing. In Taiwan, markets slid amid new restrictions to control the pandemic.

Japan’s Nikkei 225 dropped 0.9% and the Kospi in Seoul declined 0.6%. Stocks in Taiwan stumbled 2.9%, and stocks in Indonesia dropped 2%. Singapore gained 0.9%. Australia’s S&P/ASX 200 advanced 0.1%. The China CSI 300 index added 1.4% and the Hang Seng gained 0.7%.

Fresh data out of China showed an easing of growth last month, with industrial output rising 9.8% in April from a year earlier, versus March’s 14.1% rise, the National Bureau of Statistics said Monday. The result still beat a 9.1% rise expected by economists polled by The Wall Street Journal.

Retail sales jumped 17.7% last month, but well off a 34.2% jump in March and falling short of the 24.9% rise expected by economists. The slowing data reflects more of normalization for China as it began bouncing back from the pandemic last April.

Elsewhere, investors were keeping a close eye on rising COVID-19 cases. Taiwan reported a record single-day rise of 203 cases on Sunday, and the government imposed new restrictions for Taipei City and New Taipei City beginning Saturday.

Taiwan is also home to Taiwan Semiconductcor Manufacturing, a dominant chip maker whose role has been amplified amid a global shortage of chips, notably in the auto industry. Those shares closed down 1.4%.

But stock losses were limited after Government suggestions that they are preparing to intervene to support equities, Jeffrey Halley, senior market analyst at foreign exchange broker OANDA, told clients in a note.

Malaysia, already under an aggressive nationwide restriction regime, faces spiralling cases, as does Thailand, while Japan enlarged the number of prefectures in states of emergency, said Halley.

In the bigger picture, it is mainland China that matters from a coldhearted economic perspective. An explosion of local transmission there would cause the Asian and global recovery story to be re-evaluated. Thankfully, there is little sign of that outcome occurring, added Halley.

He said a close second for the rest of Asia, is the effectiveness of the national restrictions being imposed. The following month will be critical.

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