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Asia Pacific Shares See Red on Profit-Taking Ahead of Weekend; China Trade Data on Tap

James Hyerczyk
·3-min read

The major Asia Pacific stock indexes are in the red on Friday, putting them in a position to finish lower for the first time since Monday. The CNBC headline writers are saying that shares are down as investors await China’s trade data. However, one could build a case for profit-taking ahead of weekend on continuing concerns over the economic impact of the coronavirus.

At 04:09 GMT, Japan’s Nikkei 225 Index is trading 23833.37, down 40.32 or -0.17%. Hong Kong’s Hang Seng Index is at 27278.83, down 214.87 or -0.78% and South Korea’s KOSPI Index is at 2206.41, down 21.53 or -0.97%.

In China, the Shanghai Index is trading 2849.51, down 17 or -0.59%. Australia’s S&P ASX/200 Index is 7010.70, down 38.50 or -0.55%.

Mainland Chinese Stocks Tumbled

Stocks in China were under pressure as investors awaited the release of China’s trade data for January on Friday. Investors are most interested in China’s exports and imports for January. The country’s dollar-denominated exports and imports for December had beat expectations. In December China’s trade surplus with the U.S. was $23.18 billion – down from $24.6 billion in November.

Analysts Cutting China GDP Forecasts

Some analysts and economists are downgrading China’s GDP growth forecast for 2020 as the coronavirus outbreak hits the world’s second largest economy. In 2019, China’s full-year GDP growth was 6.1%, down from 6.6% the year before.

“The immediate and most significant economic impact is in China…but will reverberate globally, given the importance of China in global growth as well as in global company revenue,” said Moody’s Investor Service in a report last Wednesday.

On the same day, a Chinese government economist said that the country’s first-quarter economic growth may drop to 5% or even lower due to the virus outbreak, Reuters reported, citing a local magazine.

Auto Stocks in Japan and South Korea Continue to Suffer

Autos in Japan and South Korea saw declines in early Asia trading. Japan’s Mazda slumped over 3%, while Honda was down 1.52%. South Korea’s Hyundai Motor fell 1.52%.

Earlier in the week, Reuters reported that Hyundai Motor will suspend production in South Korea because the coronavirus outbreak has disrupted the supply of parts.

RBA’s Lowe Says Rising Unemployment Would Trigger Rate Cut

On Friday, Australia’s central bank chief Philip Lowe signaled his board is on hold, saying further cuts to an already record-low interest rate risked doing more damage to the economy than the short-term benefit it would create.

“At the moment, the risks have slightly tilted to outweigh the benefits,” the governor told a parliamentary panel in Canberra Friday. “But, that could turn, particularly if the unemployment rate deteriorates.”

Lowe also warned of “significant areas of uncertainty” such as the outbreak of coronavirus in China – Australia’s key trading partner – and said signs of weaker hiring and inflation would swing the balance back toward rate cuts.

This article was originally posted on FX Empire