Asian Markets Drifted on Disappointing Chinese Stimulus and Trade Concerns

Asian stocks dropped on November 12 with Chinese markets leading the decline as investors weighed the threat that the US President-elect Donald Trump would put on China through tightening trade policies. China’s A-share markets and H-share market both fell sharply driven by concerns over possible U.S.-China trade policy shifts and reduced confidence in China's economic stimulus efforts.

As the markets closed, the Shanghai Composite Index fell 1.39%, the Shenzhen Component Index slumped 0.65% at 11,314.46 points, and the GEM Index slipped 0.07% at 2,390.8 points. Hang Seng Index decreased 2.84%. The Hang Seng Technology Index closed down 4.19%.

Retail sentiment in China’s markets was dampened after the Chinese government's latest stimulus package failed to include anticipated direct spending aimed at supporting consumers. Investors had hoped for stronger measures, given recent economic pressures, and were left disappointed by what they perceived as insufficient fiscal support. Steven Leung, executive director at UOB Kay Hian in Hong Kong, noted concerns that the Trump administration’s cabinet selections, including the potential appointment of Senator Marco Rubio, signaled a hawkish stance towards China that could lead to accelerated trade policy actions.

Unexpectedly, the chip sector surged in China after the US government asked TSMC to stop supplying ai-related chips to its mainland customers.

The broader Asian markets dipped. Australia’s ASX 200 slipped 0.13% despite positive consumer sentiment data. South Korea’s KOSPI fell 1.94%. India’s Nifty 50 declined 0.84%, awaiting CPI inflation data. Japan outperformed the sluggish regional markets in the morning but ended with the Nikkei 225 falling 0.4%. Its increase in the morning is largely due to strong domestic earnings reports. Sony Corp saw a 70% profit increase, though it gave a cautious outlook due to slowing hardware sales. SoftBank Group also gained slightly, though its earnings are expected to be weak as a result of dropping sales.