Retail Sales Advance but Industrial Output Falls in Japan, Hong Kong Exchanges Hikes Dividend

Arjun Pandit
29 Feb, 2024
Mumbai

Stocks in Asia lacked direction, and investors reacted to domestic corporate and economic news. 

Benchmark indexes in Japan declined after industrial production fell for the third month in a row; in China, they edged slightly higher in lackluster trading; and in India, they traded around flatline amid a lack of fresh market catalysts after the end of the earnings season. 

 

Nikkei In Japan Extend Losses to Second Consecutive Session

Stocks in Tokyo declined for the second day in a row, and benchmark indexes edged lower following weak markets in New York. 

Investors also reviewed the latest update on retail sales and industrial production, but market sentiment remained cautious ahead of the release of inflation data in the U.S. 

Retail sales in Japan rose 2.3% from a year ago in January, following the upwardly revised 2.4% increase in December, the Ministry of Economy, Trade, and Industry reported Thursday. 

Retail sales rose for the 23rd month in a row as consumption continued to rebound since the decline during the pandemic era over the two years between 2020 and 2021. 

A separate report by the government agency showed industrial production declined 7.5% from the previous month in January after rising 1.4% in the previous month. 

On an annual basis, industrial production declined 1.5%, after declining 1.0% in December and extending contraction for the third month in a row. 

The Nikkei 225 average declined 0.1% to 39,172.78, and the Topix index added 0.1% to 2,677.82. 

 

China Stocks Turned Higher In Weak Trading

Market indexes in Shanghai and Hong Kong edged higher on the hopes that the regulators would take more steps and China-controlled funds would provide capital to stabilize financial markets. 

Property stocks advanced for the second day in a row in Hong Kong after the local government removed decade-old measures to cool residential property speculation. 

The CSI 300 index added 0.9% to 3,481.52, and the Hang Seng index added 0.2% to 16,561.53. 

Longfor, China Vanke, China Resource Land, Sun Hung Kai, and Henderson Land advanced between 0.3% and 0.8%. 

Tech stocks were mixed, and Baidu declined 8.1% after the largest search engine operator in China reported revenue in the fourth quarter increased by 6% but net income dropped by half. 

Xinyi Solar soared 22% to HK$4.68 after the company reported better-than-expected quarterly earnings due to a higher margin. 

 

Hong Kong Exchanges Annual Earnings Rebound  

Hong Kong Exchanges & Clearing increased 0.1% to $245.0 after the company reported an 18% increase in annual profit to HK$11.9 billion, or HK$9.37 per share, meeting market expectations. 

The company proposed to pay a second interim cash dividend of HK$3.91, increasing the annual total to HK$8.41 and higher than HK$7.14 in 2022. 

The exchange operator's annual earnings were aided by HK$1.5 billion in net investment income in its global stock and bond portfolio, compared to a loss of HK$48 million in the previous year.  

The steady decline in trading activity by 16% to HK$105 billion in 2023 also negatively impacted the company's core revenue by 18%, as the exchange struggled under weakening market confidence and faltering interest from foreign investors. 

The Hong Kong Exchange was an attractive place for foreign investors looking to get exposure to mainland Chinese stocks.

But the exchange has lost its luster among foreign investors and young companies seeking to list their companies, as Chinese regulators have stepped up arbitrary spying charges and clamped down on tech companies under the guise of national security. 

This week, Chinese regulators forced out a quant hedge fund manager after the regulators and China-controlled funds intervened in the market to stabilize faltering stocks, further denting investors' confidence in the financial systems of Hong Kong and mainland China. 

About 68 Chinese companies raised $6 billion through an initial public offering in 2023, a 20-year low, amid weak interest from investors. 

 

India Stocks Attempt to Rebound Amid Cautious Asian Markets

Stocks in Mumbai traded slightly higher amid cautious market sentiment. 

The Sensex and the Nifty indexes edged up 0.2% as investors debated market drivers for the next leg up. 

So far in 2024, foreign investors have poured money into Indian stocks in the hopes of a continued rebound in corporate earnings driven by sustained economic growth. 

Moreover, domestic investors have supported the market advance despite high stock valuations. 

In addition, global market sentiment has been cautious as several markets around the world trade at record highs. 

Benchmark indexes in the U.S., Germany, France, Japan, and India are trading near record highs. 

The Sensex index increased 0.2% to 72,603.30, and the Nifty index rose 0.3% to 21,011.85. 

On the Mumbai stock exchange, 47 stocks traded at their 52-week highs and 15 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.06%, and the Indian rupee strengthened to ₹82.86 against the U.S. dollar.