Tech Weakness and Growth Worries Hobble Stocks In China and Japan

Arjun Pandit
26 Jan, 2024
Mumbai

Benchmark indexes in Asia struggled in Friday's trading, and tech stocks led the decliners in Japan, China, and Korea.

Market indexes fell after Intel offered a cautious sales outlook in the current quarter, blaming ongoing macroeconomic headwinds.

Electronic equipment makers, semiconductor developers, and manufacturers fell sharply in Tokyo, Seoul, Shanghai, and Hong Kong.

The Nikkei dropped more than 1%, and the benchmark indexes in mainland China and Hong Kong declined more than 0.8%.

The KOSPI index edged higher by 0.7%, the ASX 200 index added 0.5%, and financial markets in India were closed to celebrate Republic Day.

 

Broad Selloff in Japan Stocks

Stocks in Tokyo turned lower in a broad decline and erased gains from the previous session.

The Nikkei index dropped 1.4% to 35,739.63, and tech stocks led the decliners after Intel forecasted weak sales in the current quarter.

Renesas Electronics plunged 6.9%, Tokyo Electron decreased 2.4%, and Avantest plunged 5.5%.

For the week, the Nikkei index is set to decline more than 2% after the weakness in tech stocks spread to the broader market.

Toyota Motor decreased 0.6%, Sony Group fell 2%, and Mitsubishi UFJ fell 2.4%.

 

Tokyo Inflation Eased in January

Investors also reviewed the latest inflation data in the Tokyo area, a leading indicator of nationwide price trends that eased more than expected in January.

Overall inflation decreased to 1.6% from 2.4% in December, largely reflecting a weakness in energy prices.

Core inflation in Ku-Area declined to 1.6% from 2.1% in December, the lowest since March 2022.

The inflation rate fell below the 2% target set by the Bank of Japan after staying above the level for 19 months in a row, easing pressure on the central bank to end its ultra-loose policy soon.

 

China Stocks Turn Lower, Trim Weekly Gains

Stocks in China resumed their slide after initial enthusiasm over China's measures to stabilize financial markets faded.

Market indexes halted a three-day rally that saw benchmark indexes in Hong Kong jump over 8% and in Shanghai surge over 4%.

Market sentiment turned cautious on long-term growth worries and the government's inability to provide additional fiscal measures because of sky-high debt and no end in sight for China's property bubble.

Foreign investors added about $1.5 billion to their China stock holdings in the four-day period to Thursday this week.

The latest measures from the People's Bank of China revived flagging interest in Chinese stocks after foreign investors sold about $30 billion worth of stocks in the last six months.

The CSI 300 index declined 0.8% to 3,318.26, and the Hang Seng index decreased 1.0% to 16,050.98.

For the week, the CSI 300 index rose 1.7% and the Hang Seng index advanced 4.7%, the first weekly rise in 2024.

Alibaba Group fell 2.7%, Meituan eased 3.5%, and Tencent dropped 1.7%.

Electric vehicle makers also traded lower after Tesla forecast a notable decline in sales volume in 2024.

BYD declined 3.5%, Li Auto dropped 4%, Xpeng fell 3.4%, and NIO eased 1.7%.

Lenovo Group plunged 8.2% after retired U.S. General James Marks supported legislation in an opinion piece published by Newsweek banning computers made in China on espionage worries.