Asia report: Chinese stocks extend slump on mixed day for region

(Sharecast News) - Markets in the Asia-Pacific region closed with mixed results on Friday as Chinese stocks extended their slump while other regional indices showed resilience. Investor sentiment was shaped by fresh signals from China's policymakers and ongoing political instability in South Korea.

Russ Mould, investment director at AJ Bell, noted that weakness in mining plays was a theme of market trajectory at the moment.

"Miners' fortunes are closely tied to the commodity-hungry Chinese economy where faltering stimulus efforts, uneven economic data, and the threat of tariffs continue to raise questions about metals demand," he said.

"Domestic Chinese shares came under further pressure amid mixed trading in Asia more broadly.

"The post-Christmas malaise in US stocks continued as investors await the inauguration of president-elect Donald Trump who could prove a wildcard for markets this year."

Mould added that White House incumbent Joe Biden appeared to be keen to reinforce his legacy as a champion of working people in America, as he reportedly prepared to block the $15bn takeover of US Steel by Japan's Nippon Steel.

"Trump had already threatened to quash the deal once he entered office."

Markets mixed on third day of the new year

In mainland China, the Shanghai Composite fell 1.57% to 3,211.43, and the Shenzhen Component dropped 1.89% to 9,897.12.

Bond yields in China hit record lows, with the 10-year yield falling to 1.598% and the 30-year yield to 1.819%, as the People's Bank of China reportedly considered cutting rates this year.

Despite government pledges to expand ultra-long bond issuance and bolster consumption, concerns over sluggish economic recovery weighed on sentiment.

Hong Kong's Hang Seng Index bucked the trend, gaining 0.7% to close at 19,760.27, supported by strong performances from Xiaomi Corporation, up 6.62%, and Orient Overseas International, up 3.83%.

South Korea's Kospi 100 surged 1.97% to 2,443.04, led by Hanwha Solutions, which climbed 10.71%, and SK Square, up 7.38%.

Investors largely brushed off political uncertainty following an unsuccessful attempt to detain the impeached president Yoon Suk Yeol.

Australia's S&P/ASX 200 advanced 0.6% to 8,250.50, with Paladin Energy and Sigma Healthcare leading the gains, up 4.31% and 3.73%, respectively.

Meanwhile, New Zealand's S&P/NZX 50 edged down 0.33% to 13,067.83, weighed by losses in Eroad, which dropped 5.31%, and Synlait Milk, down 2.27%.

In currency markets, the dollar was last down 0.11% on the yen, trading at JPY 157.33, as it lost 0.22% against the Aussie to AUD 1.6084, and retreated 0.13% from the Kiwi, changing hands at NZD 1.7852.

On the oil front, Brent crude futures were last down 0.49% on ICE at $75.56 per barrel, and the NYMEX quote for West Texas Intermediate was off 0.52% at $72.75.

Japan's markets remained closed for the holiday.

China announces economic strengthening plans, Korean authorities fail to detain president

In economic news, China announced plans to strengthen its economic foundation in the year ahead by expanding ultra-long bond issuance and boosting domestic consumption, senior officials from the National Development and Reform Commission said on Friday.

The government aimed to subsidise purchases of consumer electronics, including smartphones and smartwatches, while increasing vocational training and pensions.

Additional support was apparently planned for gig economy workers to stabilise income and job security in the fast-growing sector.

In a separate move, China's Ministry of Commerce proposed export restrictions on key technologies used in the production of battery components and the processing of critical minerals, including lithium and gallium.

The proposal, issued Thursday, signalled Beijing's intent to secure control over essential supply chains amid global competition for rare resources.

Meanwhile, political uncertainty in South Korea continued to dominate headlines.

The country's corruption watchdog was unable to detain impeached and suspended president Yoon Suk Yeol after a prolonged standoff at the presidential residence, Yonhap News reported.

Reporting by Josh White for Sharecast.com.