Asia Shares Drop Substantially As Result Of China’s Reports Of Weak Data

Index Performances

Asia stocks took a downward turn on Monday owing to the data release of a considerably weaker-than-projected Chinese trade over the course of the weekend.  The main Chinese markets which were closely watched due to the trade dispute between China and the U.S. slipped on the trading day.

According to reports, Shanghai composite fell by 0.82% and it closed at nearly 2,584.58 and the Shenzhen composite fell 1.345%  and it closed at about 1,332.53. The Hang Seng index in Hong Kong fell with about 1.22% in the final trading hour due to the fall in the shares of  China Construction Bank listed on the index. The shares of the Bank fell by 1.39% while Tencent also shed 0.9%.

Shanghai composite fell by 0.82% and it closed at nearly 2,584.58

Dwindling Data

China reported weaker-than-projected imports and exports in November which stood as an indication of slower domestic and global demand. It also increased concerns about the possibility that China may have to put in some measures to enable it to boost its growth.

According to data, its exports for November climbed 5.4% from one year earlier and that was obviously below the expected 10% jump by analysts. It also stood as its weakest performance ever since it had a 3% contraction back in March. Also, the data revealed that there was a significant slowdown in the yearly growth for China’s exports to all its major partners.

Moving to its import growth, it came in at 3% and it was the slowest ever since 2016 and also a fraction lesser than the anticipated 14.5%. For the second time, there was a fall in iron ore imports and that reflected the dwindling restocking demand amid narrowing of profit margins. According to analysts, the country’s trade data for November performed below expectation by a wide margin.

They added that the softer growth of exports was a reflection of a slower-paced global growth as well as the effect of America importers who front-load shipments as a means of avoiding increased tariffs. On the other hand, the falling growth of imports indicates a softening of domestic demand.

Performance In Other Asian Regions

Nikkei 225 of Japan also fell by 2.12% and it closed at 21,219.50. Topix index fell by 1.89% and closed at 1,589.81. Japan Display’s shares fell by 10.61% after it earlier announced that it didn’t plan to reduce the production of smartphone panels this month. That followed reports that it actually had plans to cut production. Also, Pioneer plummeted by 27.27%.

Nikkei 225 of Japan also fell by 2.12% and it closed at 21,219.50.

Kospi of South Korea also dropped by 1.06% and closed at 2,053.79. On the index, SK Hynix’s shares dropped by 1.95%. In Australia, ASX 200 closed the day at 2.27% lower bringing it to 5,552.50 and virtually all sectors on the index recorded losses. Down Under also fell by 3.12% as the shares of the Big Four Australia banks declined. Commonwealth Bank of Australia shed 2.98%, National Australia Bank went down by 2.54%, Australia and New Zealand Banking Group fell by 4.16% and Westpac fell by 3.38%.

According to Rakuten Securities, Australia, the geo-Political factors are again ready to influence the markets when customarily traders are expecting a slow-down as the conditions that accompany Christmas market trading begins to unfold.

China Protests Arrest of Huawei CFO

Reports have it that on Sunday, China summoned Terry Branstad to protest the arrest of Meng Wanzhou, the chief financial officer of Huawei. According to sources, Le Yucheng, the Vice Foreign Minister lodged strong protests and solemn representations with the Ambassador over the arrest of Meng. The allegation against her was that she was suspected to have tried to evade the U.S. trade curbs placed on Iran and she was therefore detained in Canada on the 1st of December.

John McCallum, the Canadian Ambassador also got summoned on Saturday in relation to the detention of Meng and was warned about grave consequences likely to follow if the CFO of Huawei wasn’t released.

Huawei happens to be one of the biggest phone makers worldwide and the Chinese phone maker has been coming under pressures from the U.S. For instance, there are restrictions on its sales of telecom equipment in the country because of what has been described by American officials as concerns about the nation’s security.

Huawei has been coming under pressures from the U.S. for reasons related to nation’s security

Beyond its potential to influence the activities in the tech space, this arrest may also affect the current trade war between US and China. Sources claim that the stocks of companies connected to Huawei experienced decline on Monday trading day. ACC technologies in Hong Kong fell by 0.69%, Chinasoft International, a company has Huawei as one of its strategic shareholders fell with over 4%. However, Sunny Optical which produces some of Huawei phones lenses was able to rise by 2.75%.