China shares fall as service sector activity contracts in August
08:01, 31 August 2021
Markets in China fell on Tuesday after data showed that the services sector activity in Asia’s biggest economy contracted. The contractions in August were the first time since February 2020.
Data also showed that factory activity in China expanded at the slowest pace in 18 months in August due to mobility restrictions and raw material prices.
The manufacturing-heavy Shenzhen Composite Index fell as much as 1.8% to an over one-week low on Tuesday, while the blue-chip CSI 300 closed 0.2% lower.
“Worse-than-expected August PMIs”
“Given China’s zero-tolerance COVID strategy and the potential for much more infectious variants of COVID-19, the services sector could be hit again in coming months,” Nomura analysts said in a note.
“The worse-than-expected August PMIs [purchasing managers’ indices] add conviction to our view that the growth slowdown in H2 could be quite notable due to the COVID-19 Delta variant, cooling property markets, slowing exports and the campaign to reduce carbon emissions,” Nomura added.
Semiconductor firms GigaDevice Semiconductor (Beijing) and Will Semiconductor (Shanghai) were among the top percentage losers on the CSI 300 index, falling about 10% each.
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Hong Kong erases early losses
Meanwhile in Hong Kong, benchmark Hang Seng index closed the month lower for the third time in a row in August. The index lost 0.8% in August, having plunged nearly 10% in July following Beijing’s regulatory sweep of China’s education sector.
On Tuesday, the benchmark erased early losses to gain 0.6% by Tuesday afternoon. The benchmark fell as much as 1.6% earlier during the session after Beijing tightened its grip over the gaming sector by publishing new rules that restrict minors from playing video games for more than three hours a week.
Hong Kong-listed gaming firm NetEase fell by over 3.5%, while Tencent Holdings trimmed early losses to trade at 1.7% higher.
Nikkei 225 index at near three-week high
In Japan, the benchmark Nikkei 225 index closed over 1% higher at a near three-week high on Tuesday. The broader TOPIX 500 index rose by 0.6%.
Steel stocks extended gains as Nippon Steel gained 3.7% to emerge as the top boost to the benchmark. The Topix-17 Steel & Nonferrous Metals index rose 1.8% on Tuesday to take its five-day gain up to 5.2%.
VisionFund manager SoftBank Group closed 0.5% higher, retail holding company Fast Retailing gained 2.1% and car-maker Toyota Motors inched 0.6% higher. The benchmark index snapped two straight months of losses to gain nearly 3% in August.
Aussie benchmark’s eleven-month winning streak
Elsewhere, Australia’s S&P/ASX 200 index extended monthly gains to 11 straight months, rising 1.9% in August.
On Tuesday, the benchmark index rose 0.4% as technology stocks led gains. Meanwhile, the Australia and New Zealand Banking Group and the Commonwealth Bank of Australia (CommBank) extended Monday’s losses to fall 0.5% and 0.3%, respectively.
Payments firm Appen and logistics software provider WiseTech Global were among the top percentage gainers, adding 7% and 5.7%, respectively.
KOSPI jumps
South Korea’s KOSPI index saw its best day in over five months on Tuesday as the government announced a record KRW604.4trn ($518.54bn) budget plan for 2022.
The index jumped 1.8% with tech heavyweights Samsung Electronics and SK Hynix advancing over 2.8% each.
In Southeast Asia, bourses in Singapore and Jakarta fell 1.2% and 0.2%, respectively. Markets in Philippines and Thailand were up 1% and 0.5%, respectively.
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