By Willa Plank
Asian stocks were broadly lower Monday as Chinese markets continued to be rattled by a bond selloff and by fresh signs of a slowdown in China’s property market.
“Property, bond market and physical commodities are seen as becoming overheated,” said Erwin Sanft, head of China strategy at Macquarie. Also, traders were disappointed by China’s Central Economic Work Conference last week, which lacked dramatic stimulus and which was mainly about controlling financial risk, said Sanft.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -1.59% slipped 0.1%, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.33% closed down 0.9%, and Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.84% was off 0.2%. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.72% was an outlier, closing up 0.5% even as a threat of a downgrade to the country’s AAA rating hung over markets.
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Chinese stocks edged down amid fears that money was exiting China’s capital markets, amid an selloff in government bonds. China’s 10-year bond futures were down 1.1% Monday. That was a big drop for bonds — regulators automatically stop trade in the securities if they fall 2% in one day.
Chinese metals futures tumbled Monday during late trade, as growing inventory and Beijing’s calls to curb asset bubbles prompted panic selling, said analysts. The benchmark futures contract, traded on the Dalian Commodity Exchange, slumped 7.2%, with sales order piling in during the last 15 minutes. Steel rebar futures fell 5.7%.
China house prices
The growth of housing prices in China decelerated sharply in November, reined in by property-buying controls in major cities and regulators’ greater scrutiny of loans made to developers.
The average price of new homes in 70 cities rose 0.6% in November from October, according to calculations by The Wall Street Journal based on data released Monday by the National Bureau of Statistics. That compares with a 1.1% gain in October.
Hong Kong-traded shares of Chinese developers were down sharply Monday, with China Vanke /zigman2/quotes/203851375/delayed HK:2202 -0.13% closing down 3.2%, China Overseas Land & Investment dropping 1.4% and Longfor Properties /zigman2/quotes/200000250/delayed HK:960 -4.31% off 2.7%.
Shares of China Vanke were also hit by the termination of a deal to make Shenzhen Metro Group its main owner. Major shareholders of China Vanke publicly opposed the deal, and parties could not come to an agreement, the developer said Sunday. Management of Vanke, one of China’s biggest property developers, wanted to bring in Shenzhen Metro Group to help it fend off a hostile takeover by Baoneng Group.
Vanke intended to issue about 45.6 billion yuan ($6.6 billion) of new shares to Shenzhen Metro.
Japanese exports jump
Japanese export volumes jumped 7.4% in November from a year earlier, driven by overseas demand for semiconductors, ships and metals, according to data released Monday by Japan’s Ministry of Finance.
Japan’s semiconductors exports rose 24.5% in November, from a year earlier. Ship exports surged 42.1%.
Nevertheless, Japanese stocks were down for the day, hurt by a 0.5% gain by the yen against the U.S. dollar. A stronger yen hurts Japan’s exporters.
The Australian government said on Monday it expected to see wider budget deficits and slower growth over the coming years.
The ruling center-right coalition on Monday forecast a deterioration in the budget of 10.3 billion Australian dollars (US$7.5 billion) over the next four years. The deficit in the year starting July 1, 2017 is now forecast at A$28.7 billion, up from A$26.1 billion in May. Treasurer Scott Morrison also lowered growth forecasts for the current fiscal year to 2.0% from 2.5%.
Still, the government said it remained on track to restore the budget to surplus by fiscal 2020-21.
The latest budget projections from Canberra put further pressure on the country’s AAA rating, said S&P Global Ratings.