A steep drop in Chinese real estate stocks weighed heavily on market sentiment across the region.
Patrick Munnelly at TickMill Group noted that China’s CSI 300 real estate index erased two days of gains.
“China’s housing minister pledged to improve builders’ access to funding to complete thousands of projects, and the central bank’s deputy governor stated that cuts to down payments had already boosted confidence and sales,” he said.
“However, there was no new initiative to excite markets about a meaningful revival in a sector where a crackdown on developers’ borrowing has triggered a wave of defaults, while declining prices have shaken households’ faith in the asset class.”
Munnelly noted that property developer Sunac China, taking the recent rally as a cue to raise capital, contributed to dampening the mood.
“Hong Kong-listed mainland developers fell by 3%.
“Some investors took the opportunity to cash in on the good news, leading to a pullback.”
Chinese property sector leads losses across Asia
Japan’s Nikkei 225 fell 0.69% to 38,911.19, with losses driven by a 4.91% drop in Fujikura, a 3.8% decline in Bandai Namco, and a 3.21% dip in Tokyo Electron.
The broader Topix index also edged down 0.11% to 2,687.83.
China’s markets fared worse, as the Shanghai Composite shed 1.05% to 3,169.38 and the Shenzhen Component fell 0.74% to 9,891.76.
Jiangsu Luokai Mechanical & Electrical plunged 10.01%, Gemdale Corporation dropped 9.98%, and Shanghai Wanye Enterprises fell 9.97%.
In Hong Kong, the Hang Seng Index declined by 1.02% to 20,079.10, with property developers leading the losses.
Longfor Properties dropped 13.75%, China Overseas fell 6.6%, and China Resources Land lost 5.79%.
South Korea’s Kospi was nearly flat, down just 0.04% to 2,609.30, though key companies like Hyundai Motor, Celltrion, and Hyundai Glovis saw notable declines of 4.66%, 3.52%, and 3.39%, respectively.
Australia and New Zealand were the outliers, with both markets posting gains.
Australia’s S&P/ASX 200 rose 0.86% to 8,355.90, boosted by a 17.71% surge in AMP, while Paladin Energy and Westgold Resources also advanced by more than 10%.
New Zealand’s S&P/NZX 50 gained 1.01% to close at 12,768.54, supported by strength in Freightways, Fletcher Building, and Tourism Holdings.
In currency markets, the dollar was flat against the yen at JPY 149.64, while it rose 0.27% on the Aussie to trade at AUD 1.4959, and edged down 0.1% against the Kiwi, changing hands at NZD 1.6494.
Oil prices were slightly higher, with Brent crude futures last up 0.26% on ICE at $74.41 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.23% to $70.55.
Japan trade data disappoints, China to expand property development whitelist
In economic news, Japan’s export sector faced an unexpected downturn in September, with exports falling by 1.7% compared to the same period last year.
That marked the first contraction in 2024 and surprised economists, who had forecast a modest 0.5% growth.
The decline was steep, especially when contrasted with the 5.5% growth seen in August.
Imports also underperformed, growing by 2.1%, below the 3.2% anticipated by economists and down slightly from August’s 2.3% growth.
In China, the government announced plans to expand its “whitelist” of unfinished real estate projects and increase lending to developers by CNY 4trn (£432.09bn) by the end of the year.
So far, CNY 2.23trn in loans had been approved since the whitelist’s launch in January, which allows city governments to fast-track funding for residential developments.
Australia’s labour market meanwhile showed slight improvement in September, with the unemployment rate edging down to 4.1%, a surprise for economists who expected it to remain at 4.2%.
The country’s labour participation rate also ticked up by 0.1 percentage point to 67.2%, indicating a gradual strengthening of the job market.
In Singapore, non-oil domestic exports rose by 2.7% in September compared to a year earlier, though the increase fell short of the 9.3% forecast by economists and the prior month’s growth of 10.7%.
Reporting by Josh White for Sharecast.com.