Persistent Selling by Foreign Investors Push China Stocks Down, Indexes in Japan and India Advance

Arjun Pandit
19 Jan, 2024
Mumbai

Asian markets traded higher after Taiwan Semiconductor reported flat quarterly revenue growth and a decline in earnings, but the company signaled that demand is expected to improve in the current quarter.

Optimism about AI-fueled demand lifted semiconductor stocks in New York.

Moreover, a steady flow of positive updates on retail sales, jobless claims, and housing market activities supported investor enthusiasm.

The rebound in U.S. stocks supported the increase in the final hour of trading in Europe and powered the market advance across Asia in Friday's trading.

European markets gained for the first time in three days as investors reacted to positive earnings reports.

In addition, the latest ECB's policy meeting minutes showed most members supported keeping interest rates restrictive until inflation is on a sustainable path towards the 2% level.

 

Tech Stocks Power Market Rally in Tokyo

Stocks in Tokyo advanced, and tech stocks led the gainers following a tech rally in New York in overnight trading.

The Nikkei index jumped 1.2% to 35,892.20 and extended its weekly increase to 0.6%, and this year's increase to 7.7%.

The Japanese yen dropped to a seven-week low of 148.8 against the U.S. dollar after inflation fell to 2.6% in December from 2.8% in the previous month.

Core inflation, which excludes fresh food and not fuel, declined to 2.3%, the lowest level in 18 months, largely because of the high base effect and weaker prices of energy imports, said the Ministry of Internal Affairs and Communication on Friday.

The yen has declined about 5% in the year so far, and the latest weakness in the currency prompted Finance Minister Shunichi Suzuki to warn that the government is prepared to act to keep financial markets stable.

The yen has been under pressure in hopes that the Bank of Japan is likely to keep its monetary policy intact after the fall in inflation and strong earthquake in central Japan.

In stock trading, three leading semiconductor companies, Advantest, Screen Holdings, and Tokyo Electron, rose between 3% and 8%.

SoftBank gained 1.2%, and Fast Retailing added 0.2%.

Automakers closed mixed, but banks edged slightly higher in Friday's trading.

 

China Stocks Extend Weekly Losses

Stocks in Shanghai and Hong Kong gave up early gains and turned lower in afternoon trading, and foreign investors continued to lower their exposure to the second-largest economy.

The Hang Seng index decreased 0.2% to 15,355.61, and the CSI 300 index declined 0.3% to 3,263.54.

The CSI 300 index is set to close down 0.2% in the week and fall 3.7% in the year so far.

The Hang Seng index is set to fall 5.5% in the week and 8.6% in the year so far.

Foreign investors have sold 6.6 billion yuan, or $917 million, of Chinese shares in the year so far, according to data available from Stock Connect.

This selloff is in addition to the $26 billion of stocks sold by foreign investors in the five-month period last year between August and December.  

Benchmark indexes in mainland China and Hong Kong declined for four years in a row and dropped about 42% from their highs in 2020 on the worries that corporate earnings will continue to decline on the slowing economic growth, protracted property market slump, and rising tensions with the U.S.

 

India Indexes Rebound

Stocks in Mumbai opened sharply higher after tech stocks rallied in an overnight rally in New York, sparking a rally in Asian markets.

The Nifty and the Sensex indexes gained more than 0.8% in early trading and cut losses from the previous two sessions.

The Sensex index decreased 396.62 points to 71,104.14, and the Nifty index fell 132.25 points to 21,439.70.

Two widely followed indexes are set to close down about 1.6% in the week.

On the Mumbai stock exchange, 304 stocks traded at their 52-week highs and 5 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.19%, and the Indian rupee edged lower to ₹83.14 against the U.S. dollar.