Asia Markets: Chinese stocks fall, other Asian markets mostly quiet
More new regulations and investors’ preference for larger-cap companies pressured Chinese stocks, while activity was muted elsewhere in the region. Thursday is a holiday in Japan and the U.S.
The Shenzhen Composite 399106, -2.92% ended morning trading down 1.7% and the startup-heavy ChiNext 399102, -2.77% slid 2% as Beijing took steps to halt the proliferation of small online lenders, days after saying it plans to streamline oversight of asset-management products sold by financial institutions.
Weak starts — often attributed at least in part to regulatory concerns—followed by quick recoveries has become something of a habit in Chinese markets of late.
Some investors are rotating away from smaller-cap companies, which dominate the Shenzhen stock market, into large caps, more prevalent in Shanghai, said Caroline Yu Maurer, head of greater China equities at ?BNP Paribas Asset Management. “People are willing to pay for quality,” she added.
The Shenzhen Composite, home to manufacturing and tech companies, has fallen 2.7% this week, dropping it into negative territory for 2017, a sharp contrast to the double-digit gains and multiyear or record highs achieved by many Asia markets.
On Thursday, selling in some so-called white-horse stocks—local jargon for blue chips—also weighed on sentiment, said David Millhouse, head of China research at Forsyth Barr Asia.
They have been under pressure for the past week, since the state-run Xinhua News Agency expressed concern about Kweichow Moutai 600519, -2.67% , which frenzied investors had turned into the world’s most valuable liquor company. Shares in the maker of the traditional Chinese spirit baijiu fell 2.1% Thursday morning, putting the past week’s skid at 11%.
Meanwhile, early strength in Hong Kong stocks HSI, -0.62% withered into the lunch break there, with the Hang Seng finishing up 0.1% after earlier rising as much as 0.6%, a day after closing above 30000 for the first time in a decade.
Shane Chanel, an equities and derivatives adviser at ASR Wealth Advisers, said he is on watch for profit-taking after the recent gains in many Asian stock markets. He cautioned that markets could take a hit if U.S. tax-overhaul efforts are derailed.
“Any hiccups to the implementation of Trump’s tax reforms…will mean the Grinch will be visiting us this Christmas,” he said.
In Australia, the S&P/ASX 200 XJO, +0.00% was essentially flat ahead of the close as higher commodity stocks helped cushion weakness in banking stocks. The former got a boost from the U.S. dollar’s worst session in eight months on Wednesday, which lifted commodities prices.
Oil futures CLF8, -0.24% were down 0.2% in Asian trading after the U.S. benchmark hit a 2½-year high on Wednesday.
Korea’s Kospi SEU, -0.03% was little changed even as tourist-related stocks like Lotte Tour and Amorepacific erased this week’s declines. Investors there continue to assess the impact of fresh sanctions against North Korea.
The Japanese stock market closed Thursday for Thanksgiving, as will U.S. markets.
If the yen holds on to its overnight gains, Tokyo stocks are likely to slip when trading resumes Friday, as a stronger yen hurts Japan’s export-oriented companies. The yen hit a two-month high against the dollar JPYUSD, +0.000000% which was recently around ¥111.35, versus ¥112.20 when Japan equities trading ended Wednesday.