ASIA MARKETS: Asian Markets Quiet, Even As China's GDP Beats Expectations

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04/17/2018 | 03:22 am

By Ese Erheriene

Hong Kong, Shanghai markets get brief boost from economic report

Asian stock markets struggled for direction Tuesday morning, though beaten-up equities in Hong Kong and China got a lift from news of better-than-expected economic growth in the mainland.

China's gross domestic product in the first quarter increased 6.8% from a year earlier, beating expectations slightly and equaling 2017's growth. March retail sales also rose slightly more than analysts expected, though industrial-production growth fell short.

Hong Kong's Hang Seng Index , which fell more than 0.5% just after the start of trading, briefly went into the black for the day after the data was released but was recently little changed. A smaller reaction was seen in China, though the Shanghai Composite omentarily turned higher as well. It was recently down 0.2%.

Both indexes entered Tuesday's trading on three-day losing streaks, lagging other stock markets in Asia. Property and financial stocks have been pressure points amid worries about interest rates.

While Tuesday's economic numbers were strong, forecasts about the rest of 2018 have been cooling regarding China, noted Castor Pang, head of research at Core Pacific-Yamaichi International. "We will have poor figures ahead," he predicted.

While most indexes were within 0.3% of Monday's closing levels as midday approached Tuesday, Taiwan's benchmark was a noted underperformer. The Taiex fell almost 1% amid a 1.6% slide in index heavyweight Taiwan Semiconductor (2330.TW) . Japan's Nikkei was about flat.

Broadly, investor worries around trade and the Middle East are in the rear view mirror. "Both easing geopolitical tensions and expectations of upbeat corporate results could strengthen the bearish momentum," said Klaus Baader, global chief economist at Société Générale.

The S&P 500 rose 0.8% on Monday amid upbeat first-quarter reports, and futures were recently up 0.1%.

In Hong Kong, the city's de facto central bank was forced to buy dollars again during late New York trading on Monday as the Hong Kong currency continues to hit the weak end of its trading band versus the U.S. dollar. Since Thursday, the Hong Kong Monetary Authority has purchased HK$19 billion.

"Outflows of liquidity in the banking system is another worry that will drive the Hong Kong stock market to be soft in the short term," said Pang.

One local stock not trading today is Chinese telecom-equipment giant ZTE, after the U.S. and the U.K. took fresh steps Monday against the firm, including a ban on American firms selling to ZTE. Jefferies slashed its stock target by more than half while dropping its investment rating to underperform from buy.

In other markets, oil futures rose over 0.5% in Asia after falling more than 1% on Monday. The market jumped 8% last week to reach levels last seen in late 2014.

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