Asia report: Stocks mixed as China lays out 2024 growth plans

5th Mar 2024 09:38

(Sharecast News) - Asia-Pacific equity markets closed in a mixed state on Tuesday, with a varied performance across the region.

Investor attention was particularly drawn to China's economic outlook, as the country unveiled its growth target of 'around 5%' for 2024 during its annual 'Two Sessions' congress meeting.

"Asian shares showed a mixed performance as investors took into account China's official announcements, including a bold 5% growth target," said TickMill market analyst Patrick Munnelly.

"Mainland China's markets experienced a strong surge, while Japan's Nikkei 225 index surpassed the 40,000 level reached on Monday.

"However, the Hong Kong Hang Seng Index declined."

Munnelly noted that the National People's Congress in Beijing unveiled goals for 5.5% urban unemployment and 3% inflation, as well as measures to stimulate an economy facing challenges due to a property market downturn and persistent deflation.

"Markets responded with scepticism to the proposals, especially given the absence of any specific fiscal stimulus package."

Markets in a mixed state as Nikkei remains above 40k handle

In Japan, the Nikkei 225 index exhibited a marginal decline of 0.03%, settling at 40,097.63, while the broader Topix index saw a modest uptick of 0.5%, reaching 2,719.93.

Leading the declines on Tokyo's benchmark was DeNA, down 4.6%, followed by a fall of 3.85% for Takara Holdings, and M3, which lost 3.58%.

In China, the Shanghai Composite managed a slight gain of 0.28%, closing at 3,047.79, whereas the Shenzhen Component experienced a minor dip of 0.23%, ending the day at 9,416.80.

Shares of Guangan and Dongfeng Automobile led the losses in Shanghai, losing 10.16% and 10.08%, respectively.

Hong Kong's Hang Seng Index faced a significant setback, sliding 2.61% to settle at 16,162.64.

Key stocks leading the losses included JD Health International, down 8.11%; Alibaba Health Information Technology, off 7.95%; and Sino Biopharmaceutical, which lost 7.62%.

South Korea's Kospi index also saw a decline of 0.93%, closing at 2,649.40, with notable losses from EcoPro Materials and Posco Future M, down a respective 7.03% and 5.23%.

Australia's S&P/ASX 200 index experienced a marginal decrease of 0.15%, finishing the session at 7,724.20.

Companies in the red in Sydney included Pilbara Minerals, down 7.03%, and Igo, which was 5.27% lower.

New Zealand's S&P/NZX 50 index registered a modest gain of 0.25% to reach 11,753.02, led higher by Heartland Group Holdings and Oceania Healthcare, which added 5.04% and 3.28%, respectively.

In currency markets, the dollar was last down 0.08% on the yen, trading at JPY 150.41.

Conversely, the greenback rose 0.2% against the Aussie to reach AUD 1.5393, while it saw a 0.15% increase on the Kiwi, changing hands at NZD 1.6435.

On the oil front, Brent crude futures were last up 0.12% on ICE at $82.90 per barrel, while the NYMEX quote for West Texas Intermediate registered a minimal increase of 0.01% to $78.75.

China lays out 2024 economic plans as services sector expands further

In economic news, China was in focus as it unveiled its blueprint for 2024 during the annual National People's Congress, setting a growth target of "around 5%" for gross domestic product (GDP).

Premier Li Qiang presented the Government Work Report, which highlighted initiatives such as issuing "ultra-long" special bonds for major projects and easing restrictions on foreign investment in manufacturing.

The deficit-to-GDP ratio was capped at 3%, lower than last year's revised figure of 3.8%.

To finance national strategic projects, Beijing announced plans to issue CNY 1trn in "ultra-long" special treasury bonds and CNY 3.9trn of special-purpose bonds for local governments.

The bonds were expected to support long-term planning in critical sectors like infrastructure.

Policymakers also outlined targets for urban unemployment, job creation, and consumer inflation, aiming for an urban unemployment rate of about 5.5%, the creation of 12 million new urban jobs, and a consumer price index rise of approximately 3%, aligning with the goals it set for 2023.

"Premier Li said risk prevention is the key aim of property market policy this year, and the work report left out the mantra 'housing is for living, not speculation' again," said Pantheon Macroeconomics chief China economist Duncan Wrigley.

"But this is merely acknowledgement of the recent policy shift towards stabilising developer financing, with the rollout of nearly 300 urban real estate financing mechanisms.

"Mr Li called for promoting the stable and healthy development of the real estate market, but without hinting at further specific policy support for new housing demand."

Wrigley added that Li called for encouraging the trade-in of old consumer goods for new ones, as well as the promotion of autos and electronics consumption, echoing the policy signals at top party meetings last week, but without providing details.

"China is likely to rely mainly on fiscal support to keep growth at an acceptable level, while monetary policy plays an accommodative role, with only token rate cuts.

"We think China is likely to see the need for another mid-year fiscal boost later this year, as the recovery will probably lose steam without further fiscal support.

"China is sticking to its guns by avoiding a mega-stimulus, as it refashions its growth model."

Meanwhile, China said it would increase its defence spending by 7.2% in 2024, following similar percentage rises in recent years.

On the data front, China's services sector saw a slight slowdown in February, with the Caixin services purchasing managers' index (PMI) slipping to 52.5 from 52.7 in January.

The sector still expanded, however, with employment showing a slight increase for the second consecutive month and companies remaining optimistic about future activity.

Elsewhere in the region, South Korea's economy maintained its growth momentum with a quarter-on-quarter expansion of 0.6% in the final three months of the year, according to revised central bank data, consistent with earlier estimates.

Australia also saw positive economic indicators, as its current account surplus widened significantly in the fourth quarter, buoyed by strong exports of iron ore and coal.

In Japan, headline inflation in Tokyo accelerated to 2.6% in February, rebounding from a 22-month low in January.

Core inflation and 'core-core' inflation, which exclude food and energy prices, remained steady, suggesting stable price trends in the country.

Tokyo's inflation figures are often viewed as leading indicators for nationwide trends in Japan.

Reporting by Josh White for Sharecast.com.