Asian stocks continued to retreat from earlier gains on Monday, as investors absorbed a lower-than-expected economic data from China amid tighter policies and trade tensions with the US.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell by 0.3 percent to $538.37, after rising momentarily on early improvements in Chinese shares.
South Korea’s KOSPI index slipped 0.3 percent to ₩2,301.99, while markets in Japan are closed for a holiday.
China stocks moved into negative territory, after data showed the country’s economy to have weakened in the second quarter.
Hong Kong’s Hang Seng index added 0.08 percent HK$28,548.00, but the China Enterprise declined by 0.5 percent to HK$10,683.07.
Both the Shanghai Composite and the blue-chip CSI300 index dropped 0.6 percent to CN¥2,813.92 and CN¥3,471.70 respectively. The Shenzhen composite also shrunk 0.1 percent to CN¥1,602.84.
Australia’s S&P/ASX 200, meanwhile, was down 0.4 percent to A$6,241.50.
China Economy Slows Down in the Second Quarter
Losses in Asian equities came after the world’s second-largest economy reported a slowdown in its growth, with its gross domestic product (GDP) expanding to an annual rate of 6.7 percent in the three months ended June, which is slightly lower than the 6.8 percent recorded between January and March.
Still, the latest figure ended higher than the government’s target of about 6.5 percent for the year, despite being the slowest pace since 2016.
Industrial production also climbed to 6 percent in the quarter, although it missed expectations of a 6.5 percent growth.
Retail sales on the other hand, increased to 9 percent, surpassing forecast of 8.8 percent, although it appeared to only have partial impact on stock markets.
Authorities attributed the slowdown to factory output growth that fell to a two-year low, with demand at home and overseas declining.
Officials indicated China was on course to meet its 2018 GDP growth target of 6.5 percent, but cautioned about the risk posed by the escalating trade war with the US.
Mao Shengyong, spokesman for the National Bureau of Statistics (NBS), stated that world trade protectionism continues to heat up, presenting a major challenge to the world economic recovery and creating more challenges and uncertainties for them.
The US and China have already slapped tariffs on $34 billion worth of each other’s goods, but Washington notched the conflict higher last week by announcing to levy additional tariffs on another $200 billion worth of Chinese products.
Beijing already said it would do the same thing, with Mao stating that such actions will harm both the countries’ economies, and now that the global economy is extremely integrated, and the industrial sector is globalized, several connected countries will also be affected.
China’s consumer prices and spending is projected to remain stable in the second half of the year, and no changes are expected to be seen in the trend of the country’s economy.