Asia report: Most markets fall amid mixed data from China, Hong Kong

(Sharecast News) - Markets across the Asia-Pacific region were mostly lower on Monday as investors digested mixed economic data and corporate performances. China's Caixin services PMI surged to its highest level since May, indicating robust growth in the sector, although that failed to lift Chinese markets.

Over the weekend, China's central bank pledged a "moderately loose" monetary policy in 2025 to stimulate the economy.

"Asian share markets showed a mixed performance on Monday, as investors anticipated a week filled with economic updates that are expected to highlight the United States' strong performance and bolster the dollar's continued upward trend," said TickMill partner Patrick Munnelly.

"Meanwhile, political instability persisted, with reports indicating that troubled Canadian prime minister Justin Trudeau could potentially announce his resignation as soon as Monday.

"Japan's Nikkei index fell after returning from a holiday, partly due to Japanese government bonds yields reaching their highest level since 2011."

Munnelly noted that South Korean stocks were in the green, although the situation regarding president Yoon Suk Yeol remained uncertain.

"Chinese blue-chip stocks decreased by 0.1%, despite a survey indicating that services activity grew at its fastest rate in seven months in December.

"For the first time since late 2023, China's onshore yuan has surpassed an important threshold, coinciding with news that the People's Bank of China plans to release the largest offshore yuan bonds in Hong Kong this month."

Most markets fall on first Monday of 2025

In China, the Shanghai Composite was down 0.14% at 3,206.92, and the Shenzhen Component declined 0.12% to 9,885.65.

Losses in Shanghai were led by Wenfeng Great World Chain Development, Fujian Dongbai Group and Guangzhou Tongda Auto Electric, which all lost more than 10%.

Japan's Nikkei 225 slid 1.47% to close at 39,307.05, while the broader Topix fell 1.02% to 2,756.38.

Losses on Tokyo's benchmark were led by companies like DeNA, which plunged 7.75%, and IHI Corporation, which dropped 5.48%.

In Hong Kong, the Hang Seng Index fell 0.36% to 19,688.29, weighed down by sharp losses in consumer stocks.

China Resources Beer Holdings shed 3.74%, while Nongfu Spring and China Hongqiao Group declined 3.42% and 3.31%, respectively.

South Korea's Kospi 100 bucked the regional trend, jumping 2.46% to 2,503.08.

Gains were led by tech giants SK Square, which jumped 10.31%, and SK Hynix, which rose 9.84%.

Australia's S&P/ASX 200 edged up 0.08% to 8,257.40, driven by strong performances in financials and resource stocks.

Insignia Financial soared 14.69%, while Spartan Resources and Paladin Energy climbed 6.33% and 5.47%, respectively.

Across the Tasman Sea, New Zealand's S&P/NZX 50 inched up 0.04% to 13,072.93, with Auckland International Airport and Stride Property leading gains.

In currency markets, the dollar was last 0.32% stronger on the yen, trading at JPY 157.76, while it lost 0.46% against the Aussie to AUD 1.6012, and retreated 0.41% from the Kiwi, changing hands at NZD 1.7743.

Oil prices were on the back foot, with Brent crude futures last down 0.3% on ICE at $76.28 per barrel, and the NYMEX quote for West Texas Intermediate losing 0.34% to $73.71.

China's service sector expands more rapidly, Hong Kong PMI edges down

In economic news, China's services sector expanded at a faster pace in December according to the Caixin services purchasing managers' index, which rose to 52.2 from 51.5 in November.

The index, which had stayed above the 50-mark denoting expansion for two years, showed increases in business activity and new domestic orders, supported by promotional efforts and stronger underlying demand.

However, export orders fell to their lowest levels since December 2022, highlighting external pressures.

Employment in the sector contracted as firms prioritised cost-cutting and efficiency.

Wang Zhe, senior economist at Caixin Insight Group, noted that market optimism weakened amid competitive conditions and uncertainties in global trade.

Meanwhile, China's central bank announced plans over the weekend to implement a "moderately loose" monetary policy to boost domestic demand and support sustained economic recovery.

Measures would include potential interest rate cuts and easing reserve requirements for banks, with changes dependent on both domestic and international conditions.

The central bank also emphasised resolving local government debt and addressing corruption within the financial sector, signalling continued reform efforts amid economic challenges.

In Hong Kong, the city's purchasing managers' index (PMI) edged down slightly to 51.1 in December from 51.2 in November, maintaining a third consecutive month of expansion but at a slower pace.

S&P Global attributed the deceleration to weaker growth in output, new orders, and employment, along with reduced external demand.

Jingyi Pan, an economics associate director at S&P Global Market Intelligence, said the data showed sustained growth in the final quarter of 2024, but a slowdown in December suggested a weaker start to 2025.

Concerns over US trade tariffs further dampened business sentiment in the region.

In South Korea, political uncertainty deepened as security chief Park Chong-jun refused to cooperate with the arrest warrant for president Yoon Suk Yeol over the weekend, who was impeached in December for attempting to declare martial law.

The Seoul court upheld the warrant, but Park cited legal ambiguities in his refusal to act, intensifying the crisis in Asia's fourth-largest economy.

Yoon, suspended from duties while the Constitutional Court reviewed his impeachment, could become the first sitting president in South Korea to be arrested, further straining political stability.

Reporting by Josh White for Sharecast.com.