Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped 0.6% and 0.2%, respectively, while Hang Seng index slipped 2.4%, and Nikkei 225 and TOPIX indexes declined nearly 0.3% each
Most Asian stocks dropped on Monday as fresh fiscal stimulus from China largely underwhelmed, while data over the weekend showed deflation in the country remained in play.
Regional markets brushed off a strong lead-in from Wall Street, which gained on Friday and stayed at record highs amid persistent optimism over a Donald Trump presidency.
U.S. stock index futures advanced in Asian trade, with focus turning to upcoming inflation data and a slew of Fed speakers this week.
Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped 0.6% and 0.2%, respectively, while Hang Seng index slipped 2.4% and was the worst performer in Asian markets.
Investors were mostly underwhelmed by China’s National People’s Congress (NPC) announcing about 10 trillion yuan ($1.4 trillion) in a debt swap program to improve the finances of local governments.
But a lack of direct fiscal stimulus and targeted measures to improve the housing market and personal consumption left investors wanting, particularly as data over the weekend showed Chinese deflation persisted in October.
Chinese CPI inflation grew at a slower pace last month, while PPI inflation declined for a 25th straight month.
Analysts at ANZ said the lack of direct stimulus was likely to accommodate any potential headwinds from a change in U.S. administration, after Trump’s victory. Trump has vowed to impose steep trade tariffs on China.
This notion had also weighed on Chinese markets over the past week.
Nikkei 225 and TOPIX indexes declined nearly 0.3% each, weighed by uncertainty over interest rates after the summary of opinions of the BoJ’s October meeting showed policymakers split over when to hike interest rates.
The Bank of Japan had kept rates steady in October after raising them twice earlier this year, as the bank saw a virtuous cycle of higher wages and inflation.
But the bank’s plans for more rate hikes were clouded by heightened political uncertainty, after a coalition led by Japan’s ruling Liberal Democratic Party lost its parliamentary majority.
Still, Governor Kazuo Ueda indicated at the October meeting that interest rates were still set to rise eventually.
Wider Asian markets pulled back as weakness in China spilled over. ASX 200 dropped 0.5%, as the country’s exposure to China weighed.
KOSPI declined 0.9%, weighed by losses in technology stocks.
