Mixed signs in Asia with ‘thorn’ the disappointing macro of China

Mixed signs in the Asia-Pacific markets, with China recording the biggest losses after the disappointing macro.

In particular, factory activity and retail sales in China plummeted in April as coronavirus restrictions kept workers and consumers at home and caused severe supply chain problems, overshadowing the outlook for the world’s second-largest economy.

Restrictions imposed on major cities across the country in March and April, including Shanghai, hit production and consumption and increased risks for those parts of the world economy that are heavily dependent on China.

Retail sales fell 11.1% from a year earlier, the biggest drop since March 2020, and higher than expected.

Factory output fell 2.9 percent from a year earlier, shattering expectations of a rise and the biggest drop since February 2020 as anti-coronary measures hit supply chains and paralyzed distribution.

Analysts now expect the recession in China to be more difficult to combat than the pandemic caused by the 2020 pandemic, with exports unlikely to move higher and policymakers limited to options for boosting the economy.

Industrial production around the region, which includes Shanghai, fell 14.1% in April, while that in NW China fell 16.9%.

The data also showed a drop of 47.6% in car sales, as the car industry cut production amid empty exhibitions and shortages of spare parts.

The unemployment rate rose to 6.1% in April, the highest level since February 2020 and higher than the government’s target for 2022, at 5.5%.

At the same time, the central bank of China kept the key interest rate unchangedsuggesting that it may keep the lending rate at the same level as last month.

In this climate, on the mainland China Shanghai Composite is down 0.6% and Shenzen is following a similar trend at -0.75%.

In the Hong Kong Hang Seng showed an exchange of signs during the meeting, in order for the positive trends to prevail and to record small gains by 0.25%. Hang Seng Tech moved at the same pace, which after a session with strong volatility, sat at + 0.23%.

In Japanthe Nikkei 225 adds 0.45%, while the Topix remains almost unchanged.

In South Korea Kospi loses 0.1%, while Kosdaq climbs by 0.5%.

In Australia, the S & P / ASX 200 gains 0.25%. The broader MSCI Asia-Pacific Index outperformed Japan by 0.1%.