Markets

Asia sits out equities rally as Chinese giant Alibaba slides

Turkey’s lira could not break from Thursday’s record low when it weakened about 6%

Most major currencies were largely quiet. Photograph: iStock

Fri Nov 19 2021 - 07:15

Asian shares sat out a global rally on Friday as disappointing earnings from Chinese e-commerce giant Alibaba reinforced worry about slowing growth in the world’s second-largest economy, even as European and US share futures indicated gains.

Elsewhere, Turkey’s lira could not break far from Thursday’s record low when it weakened about 6 per cent after the central bank, under pressure from president Tayyip Erdogan, cut rates again even as inflationary risks broadened.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.44 per cent and was set for a weekly decline of 1 per cent, even after a solid performance overnight on Wall Street boosted by upbeat corporate earnings.

That global rally seemed set to continue with Euro Stoxx 50 futures gaining 0.41 per cent, FTSE futures advancing 0.42 per cent and S&P 500 e-minis up 0.36 per cent.

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The tone was more subdued in Asia, with the Hong Kong benchmark down sharply 1.5 per cent, dragged down by index heavyweight Alibaba.

The Chinese e-commerce firm’s shares tumbled more than 10 per cent after its second-quarter results missed expectations due to slowing consumption, increasing competition and a regulatory crackdown.

Kenny Ng, a strategist at brokerage Everbright Sun Hung Kai Securities, said as well as Alibaba, recent poor results at Baidu, which was off 3 per cent, and Bilibili, whose shares are suspended, had reinforced the downward trend.

Given the sharp slowdown in recent Chinese retail data more broadly, analysts at Citi said in a note Alibaba’s results were not surprising.

Chinese economic data over recent months has also underlined a loss of growth momentum, dragging down stocks across the region.

MSCI’s Asian regional benchmark is down 13 per cent from its February high, while MSCI’s gauge of stocks across the globe sits at a record high.

Analysts at ANZ expect Asian stocks to continue to struggle.

“A confluence of powerful headwinds is building – a slowing China, higher commodity prices at the wrong time of the business cycle, and a mild rebound in household demand,” they said.

“Each of these developments, combined with monetary policy normalisation, can weigh on stock market earnings and valuations.”

Tokyo’s Nikkei outperformed, however, rising 0.50 per cent after Japanese Prime Minister Fumio Kishida announced a fresh stimulus package with spending worth around 56 trillion yen ($490 billion).

The yen hardly reacted to the news, and was headed for a small weekly loss, trading at 114.33 per dollar in sight of its almost five-year low of 114.97 a few days ago.

Other major currencies were also largely quiet with the dollar sitting just below a 16-month high hit against a basket of its peers earlier in the week. US benchmark Treasury yields were steady at 1.5942 per cent.

“There is a lot already in the price and as a result, progress toward higher yields is likely to be slow and defined by momentum shifts and sentiment swings,” said analysts at Westpac in a note.

Oil prices were continued their recent volatility. US crude rose 0.96 per cent to $79.77 a barrel. Brent crude rose 0.97 per cent to $82.03 per barrel.

On Thursday, oil fell to six-week lows after Reuters reported, citing sources, that the Biden administration asked some of the world’s largest oil consuming nations – including China, India and Japan – to consider releasing crude stockpiles in a coordinated effort to lower global energy prices. – Reuters

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