WJR News

Asian equities tumbled at the start of the week, with concerns over US economic growth sending technology stocks into a tailspin. The MSCI Asia Pacific Index dropped as much as 1.8%, marking its lowest point in three weeks, with major chipmakers such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. among the hardest hit. Meanwhile, Japan’s Nikkei 225 Stock Average fell more than 3%, later trimming losses as the yen rebounded after a sharp gain the previous week.

Tech Stocks and US Economy Woes

The losses were driven by growing worries about the US economy, following weak non-farm payroll data released on Friday. The disappointing numbers stirred concerns that the Federal Reserve is not acting swiftly enough to support economic growth. Investors are now anxiously awaiting the Fed’s decision on the rate cut expected next week.

“There’s scope for some more short-term downside for risk assets as positions are likely to unwind,” said Matthew Haupt, portfolio manager at Wilson Asset Management International. “Expect most weakness in Japan at this stage, with all markets suffering as well,” he added.

Adding to the regional pressure, China’s weak producer and consumer price data released Monday pointed to continuing deflationary pressures, further impacting investor sentiment. The outlook for China’s economy remains bleak, with recent downgrades and doubts emerging over the country’s ability to meet its 5% GDP growth target for 2024.

Asian Markets at a Glance

• MSCI Asia Pacific Index: -1.6%
• Japan’s Nikkei 225 Stock Average: -1.8%
• China’s CSI 300 Index: -1.1%
• Hong Kong’s Hang Seng Index: -1.9%; Hang Seng China Enterprises Index: -2.2%
• Taiwan’s Taiex Index: -2%
• South Korea’s Kospi Index: -0.7%; Kospi 200 Index: -1.1%
• Australia’s S&P/ASX 200 Index: -0.6%
• New Zealand’s S&P/NZX 50 Gross Index: -0.4%
• India’s NSE Nifty 50 Index: -0.1%
• Singapore’s Straits Times Index: +0.9%
• Malaysia’s KLCI Index: +0.3%
• Philippines PSEi Index: +0.7%
• Indonesia’s JCI Index: -0.5%
• Thailand’s SET Index: -0.4%
• Vietnam’s VN Index: -0.5%

Key Sectors to Watch

• Chinese medical equipment stocks saw gains after authorities announced plans to encourage overseas investment in the sector to revive economic growth.
• Asian luxury-goods stocks faced losses, mirroring struggles experienced by their European counterparts, as China’s economic downturn worsened.
• Chinese real estate developers also declined after China Vanke reported an August sales slump, exacerbating concerns over the sector.

Most Notable Movers

• Samsung Electronics shares slid as much as 3.3% after analysts at KB Securities and CLSA downgraded the company’s price targets due to softer demand for new technology products.
• Akeso stock surged as much as 14% in Hong Kong, the largest gain since May, after the company presented promising data on its lung cancer drug, developed in partnership with Summit Therapeutics.
• Nio’s Hong Kong-listed shares soared by 17% in their first session since the company reported strong second-quarter results. Analysts forecast positive free cash flow in the fourth quarter.
• China Renaissance shares plunged by 72% as trading resumed after more than a year of suspension.
• Guzman y Gomez shares jumped 7.8%, defying broader market weakness, after being added to the S&P Dow Jones Indices during its quarterly review.

Regional Economic Pressures

Weak economic data from both the US and China have added to the downward pressure on Asian markets. China’s deflationary challenges continue to raise doubts about the country’s ability to hit its economic targets for 2024, with its stock markets facing a string of downgrades.

In Japan, the Bank of Japan’s recent policy tightening has strengthened the yen, putting pressure on carry trades and contributing to broader market weakness. Investors are also trying to gauge the potential size of the Fed’s rate cut next week, a move that could have significant implications for global markets.