Asian stocks mostly lower, Tokyo hit by economic data

File photo of a man passing before a share prices board in Tokyo. (AFP/File - Yoshikazu Tsuno)

HONG KONG: Asian markets closed mostly lower on Monday (Nov 17), with Tokyo tumbling almost three per cent after data showed Japan's economy had slipped into recession. Hong Kong was lower and Shanghai higher in afternoon trading on the first day of a landmark link-up between the two exchanges.

A day after G20 leaders pledged to boost the global economy by US$2 trillion in four years, Tokyo authorities said Japan's GDP had contracted for a second straight quarter, fuelling expectations of a snap election and the delay of a planned sales tax rise.

Tokyo stocks - which had surged more than 10 per cent this month - tumbled 2.96 per cent, or 517.03 points, to 16,973.80. Sydney lost 0.77 per cent, or 41.8 points, to end at 5,412.5 and Seoul was flat, dipping 1.51 points to 1,943.63. Shanghai closed down 0.19 per cent, or 4.81 points, at 2,474.01 and Hong Kong sank 1.21 per cent, or 290.30 points, to 23,797.08.

Official figures showed the Japanese economy shrank 0.4 per cent quarter-on-quarter - an annualised rate of 1.6 per cent - in July-September, confounding forecasts of 0.5 per cent growth. It followed a revised 1.9 per cent contraction in April-June - or 7.3 per cent at an annualised rate. Two consecutive quarters of contraction is considered a technical recession.

The figure makes it almost inevitable that Prime Minister Shinzo Abe will delay a sales tax rise due next October and call snap elections for next month. The economy expanded in the first three months of the year, but an April 1 increase in sales tax - aimed at repaying a huge national debt - hammered consumer spending and slammed the brakes on a nascent recovery.

Last month, the Bank of Japan moved to kickstart growth again by expanding its already vast monetary easing programme - sending the Nikkei stock index surging and yen plunging - but the latest data will lead to speculation of further measures.

SNAP ELECTIONS

"In light of the sharp fall in today's preliminary estimate, it now looks likely that PM Abe will call off the hike and announce snap elections," Marcel Thieliant from Capital Economics said in a report following the data release.

The announcement briefly sent the dollar above 117 yen before retreating to 115.92 yen, against 116.26 yen in New York on Friday. The euro fetched US$1.2531 and 145.27 yen compared with US$1.2523 and 145.66 yen.

Shares in Hong Kong reversed initial gains despite the start of the exchange link with Shanghai, which is expected to see billions of dollars in cross-border transactions each day. But while Hong Kong investors bought their daily allowance of Shanghai shares before the end of trade, mainlanders used up just a tenth of their quota, suggesting they are holding back.

Jackson Wong, associate director at Simsen International Financial Group, told AFP: "Northbound (trading) is many times higher than southbound. That means Chinese investors are not blindly buying HK stocks. It's not a bad sign."

The two markets have enjoyed strong gains since the launch date was announced and Zhang Gang, senior analyst at Central China Securities, told Dow Jones Newswires: "Now that the stock trading link has materialised, all the expectations have been fulfilled and people need to take a breather. But I am still optimistic about the medium-term prospects of the market, especially if China further relaxes its monetary policy to support the slowing economy."

Oil prices were lower. US benchmark West Texas Intermediate for December delivery fell 82 cents to US$75.00, while Brent crude for January was down US$1.11 to US$78.30.

Gold was at US$1,186.55 an ounce, compared with US$1,152.81 late Friday.

IN OTHER MARKETS:

- Singapore closed down 0.81 per cent, or 27.00 points, to 3,288.67. Singapore Telecom fell 0.51 per cent to S$3.93 while real estate developer Capitaland was down 0.31 per cent to S$3.24.

- Jakarta closed 0.09 per cent higher, or 4.45 points, at 5,053.94. Palm oil producer Astra Agro Lestari rose 1.29 per cent to 23,550 rupiah, while car maker Astra International fell 0.70 per cent to 7,125 rupiah.

- Mumbai advanced 0.47 per cent, or 131.22 points, to end at 28,177.88 points. State Bank of India gained 5.44 per cent to 2,940.15 rupees, while ICICI Bank lost 1.27 per cent to 1,673.65 rupees.

- Bangkok closed down 0.43 per cent or 6.81 points to 1,569.07. Power giant Electricity Generating gained 2.05 per cent to 174.00 baht, while oil company PTT fell 1.03 per cent to 384.00 baht.

- Kuala Lumpur fell 7.31 points, or 0.40 per cent, to close at 1,806.48. RHB Capital went down 0.47 per cent to 8.45 ringgit while Maybank lost 0.10 per cent to 9.55. Public Bank gained 0.33 per cent to 18.26 ringgit.

- Taipei fell 1.10 per cent, or 98.49 points, to 8,884.39. Taiwan Semiconductor Manufacturing Co slipped 1.48 per cent to NT$133.00 while Hon Hai Precision Industry was 1.24 per cent lower at NT$95.60.

- Wellington added 0.11 per cent, or 6.23 points, to 5,490.23. Meridian Energy was up 1.49 per cent at NZ$1.705, while Spark fell 0.15 per cent to NZ$3.26.

- Manila rose 0.17 per cent, or 12.38 points, to 7,229.72. Retailer SSI Group was up 4.8 per cent at 8.51 pesos while BDO was gained 0.28 per cent to 106 pesos. Philippine Long Distance Telephone fell 0.13 per cent to 2.992 pesos.