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China’s top economic planner, the National Development and Reform Commission, unveiled new measures aimed at boosting spending in the automobile and consumer electronics sectors.
The move comes amid promises of more policy support from Beijing, after data showed that a Chinese economic recovery slowed sharply in the second quarter.
Hong Kong’s Hang Seng index was the best performer in Asia, rising 0.7% on strength in locally-listed Chinese stocks.
But the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes traded sideways after relinquishing most early gains. All three indexes were still set to lose over 1% this week, although they did trim some weekly losses on Friday.
Fund managers were seen growing less optimistic over a Chinese economic recovery this year, amid weak indicators and limited policy support. Bank of America (NYSE:BAC) economists warned that local stocks could test 11-year lows as a post-COVID economic rebound runs out of steam.
Weakness in China bodes poorly for broader Asian markets, many of which depend on the country as a trading hub.
Broader Asian stocks were held back by weakness in heavyweight technology shares. An overnight slide in major U.S. technology stocks provided weak cues to markets, following disappointing results from Netflix (NASDAQ:NFLX) and Tesla (NASDAQ:TSLA).
Taiwan Semiconductor Manufacturing Co (TW:2330) (NYSE:TSM), Asia’s most valuable company, sank 3% on Friday after the firm reported a 23% drop in its second quarter profit, and also warned that its sales and profits were set to decline further this year.
TSMC was not alone in presenting a weak outlook. Hong Kong’s Sunny Optical Technology Group (HK:2382), which manufactures smartphone components for several major brands, fell 1% after it flagged an as much as 70% profit decline in the first half of 2023.
Most tech-heavy Asian bourses retreated, with South Korea’s KOSPI down 0.1%, while the Taiwan Weighted index slid 0.7%.
Australia’s ASX 200 fell 0.3%, amid some concerns over slowing commodity demand in China.
Japan’s Nikkei 225 fell 0.1%, while the broader TOPIX was flat as data showed that Japanese consumer inflation remained sticky through June- a trend that could attract policy tightening by the Bank of Japan.
On the other hand, Indian stocks continued to outperform this week, with the Nifty 50 and BSE Sensex 30 indexes notching record highs for the past four sessions.
