By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Chinese stocks retreated Friday as caution set in ahead of economic growth data due next week, while Australian and Japanese shares climbed after key U.S. indexes hit a record high.
The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.16% fell 1.6% after a three-day winning streak that included a 3.2% jump on Thursday. The drop came amid concern that official data due Monday may signal a sharp slowdown in gross domestic product growth in the second quarter. The index ended the week with a 1.6% gain.
Economists expect China’s second-quarter economic growth to ease to 7.3% from the year-ago period, according to data compiled by FactSet, following a 7.7% increase in the first quarter.
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Chinese Finance Minister Lou Jiwei said Thursday that the nation’s economic growth will likely average 7% this year, below the government’s 7.5% target. Although Lou ruled out a so-called “hard-landing,” worries about the economy persisted.
Macquarie slashed its Chinese GDP growth forecasts in a report issued Thursday, cutting its 2014 growth view to 6.9% from an earlier projection of 7.5%.
“The downtrend of growth is a result of the structural problems of the economy. ... In our opinion, structural reforms aimed at solving these problems could lead to even lower growth,” Macquarie wrote in the report.
The downgrade follows several similar actions by various other brokerages in recent weeks. Still, some analysts said a slower economic growth was well anticipated, following remarks made by President Xi Jinping and Premier Li Keqiang.
Annette Beacher, head of Asia-Pacific research at TD Securities, said a target as low as 7.5% would have sparked a global panic a year ago, given that a 7% expansion would still be a 23-year low in China’s case.
“But thanks to ample and consistent communication from senior government officials in recent months, a 7% target is more or less baked into expectations,” she added.
Meanwhile, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.96% fell 0.8%, while South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% dropped 0.4%, after both rose more than 2% on Thursday.
On the upside, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.33% and Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.39% each ended 0.2% higher, while Taiwan’s Taiex added 0.5%.
/zigman2/quotes/210597971/delayed NIK 23,386.74, -92.41, -0.39%
All five benchmarks ended the week higher, however, with the Nikkei rising 1.4%, the S&P/ASX 200 and the Taiex each advancing 2.7%, and the Kospi and the Hang Seng Index both climbing 2%.
Friday’s performance in Asia came in the wake of a rally Thursday, when Fed Chairman Ben Bernanke indicated U.S. interest rates would remain low. Bernanke’s comments, made after the close of U.S. markets Wednesday, lifted the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.38% and Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.44% to record closing highs Thursday, but failed to help Asia on Friday.
“Today, we expect the exuberance induced by [Federal Reserve Chairman Ben] Bernanke to subside as the market realizes his words haven’t substantially changed the assessment of Fed’s tapering timing and investors look ahead to Chinese second-quarter gross domestic product [data] next Monday,” said Crédit Agricole strategist Anthony Lam.
Financials and consumer-staple firms were among Hong Kong stocks retreating Friday. Shares of foods company Tingyi Cayman Islands Holding Corp. /zigman2/quotes/208969648/delayed HK:322 +0.97% /zigman2/quotes/208456721/delayed TCYMY -2.30% dropped 3%, and Ping An Insurance Group Co. /zigman2/quotes/210315058/delayed HK:2318 -0.82% /zigman2/quotes/202212125/delayed PNGAY +0.21% declined 2.5%.
In Shanghai, Industrial & Commercial Bank of China Ltd. /zigman2/quotes/202525815/delayed CN:601398 -0.54% /zigman2/quotes/202401350/delayed IDCBY -1.19% slid 0.5%, and China Merchants Bank Co. /zigman2/quotes/210188047/delayed CN:600036 -1.20% /zigman2/quotes/208876947/delayed CIHKY -1.96% gave up 4.4%, while Industrial Bank Co. /zigman2/quotes/209353019/delayed CN:601166 -0.33% retreated 3.2% after jumping by the day’s 10% limit Thursday.
Several shares pulled back in Seoul after Thursday’s upbeat performance. Among them, Kia Motors Corp. /zigman2/quotes/206019389/delayed KR:000270 -0.99% /zigman2/quotes/205439169/delayed KIMTF +8.21% slid 4.7%, and Hyundai Motor Co. /zigman2/quotes/206684590/delayed KR:005380 -1.54% /zigman2/quotes/204364212/delayed HYMTF -0.80% lost 5.9%, following reports that more Chinese cities may restrict vehicle purchases to ease traffic congestion.
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In Tokyo, shares of Fast Retailing /zigman2/quotes/200663563/delayed JP:9983 -1.31% /zigman2/quotes/203924235/delayed FRCOY -1.53% skidded 5.8% after its quarterly operating profit edged marginally down despite a strong growth in net income and sales.
But helping the broader market move higher, shares of Asahi Group Holdings Ltd. /zigman2/quotes/206211507/delayed JP:2502 -0.50% /zigman2/quotes/206908476/delayed ASBRY -5.05% rose 1.8%, and industrial automation firm Fanuc Corp. /zigman2/quotes/202054799/delayed JP:6954 -1.42% /zigman2/quotes/209410825/delayed FANUY -0.97% rose 2.2%.
In Sydney, the resource sector added to Thursday’s gains, with gold miners stretching their advance after the metal’s futures rose for a fourth straight day in U.S. trade.
Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM +1.45% /zigman2/quotes/206026738/delayed NCMGF +0.32% sprang 8.9% higher, while in the broader mining space, BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.78% /zigman2/quotes/208108397/composite BHP -1.54% climbed 1.4%, and Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO -0.46% /zigman2/quotes/202627887/composite RIO -0.28% added 0.8%.