Asia-Pacific Shares Mostly Higher; Slow China Services Sector Growth Caps Shanghai IndexAlibaba reported profitability for its cloud computing business for the first time in a continued push to diversify its business beyond e-commerce.
The major Asia-Pacific stock indexes finished mixed but mostly higher on Wednesday after a majority of regional investors followed Wall Street’s positive lead. The lone loser was China which fell as a private survey showed China’s services sector activity growth slowing sharply in January.
Cash Market Performance
In the cash market on Wednesday, Japan’s Nikkei 225 Index settled at 28646.50, up 284.33 or 1.00%. Hong Kong’s Hang Seng Index finished at 29307.46, up 58.76 or +-0.20% and South Korea’s KOSPI Index closed at 3129.68, up 32.87 or +1.06%.
In China, the Shanghai Index settled at 3517.31, down 16.38 or -0.46%, and in Australia, the S&P/ASX 200 Index finished at 6824.60, up 62.00 or +0.92%.
China’s Services Sector Grows at Slowest Pace in Nine Months, Private Survey Finds
China’s services sector activity grew at its slowest pace in nine months in January, a private sector survey showed on Wednesday, as a flare-up in coronavirus outbreaks weighed on businesses in the world’s second-largest economy.
The Caixin/Markit services Purchasing Managers’ Index (PMI) dropped sharply to 52.0, the lowest since April, from 56.3 in December, while remaining above the 50-mark that separates growth from contraction on a monthly basis.
A sub-index for employment stood at 50.7, its lowest since July last year, and down from 52.0 the previous month, the survey showed. Growth in new export business, which only returned to expansion in November, slowed from the month before.
The loss of momentum was largely in line with the findings in an official survey released on Sunday.
“The services sector’s post-epidemic recovery continued, but at a much slower pace,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.
“Some surveyed enterprises said the services market continued to recover, while many said the market had been hurt by the resurgence of the COVID-19 pandemic.”
Caixin’s Composite Manufacturing and Services PMI, also released on Wednesday, slipped to 52.2 in January, from 55.8 the previous month.
Alibaba’s Cloud Division Profitable for the First Time
Alibaba reported profitability for its cloud computing business for the first time in a continued push to diversify its business beyond e-commerce as it faces regulatory scrutiny in China.
Alibaba previously said that it expects its cloud division to become profitable within its current fiscal year which began in April and ends on March 31, 2021.
The milestone will be welcomed by investors who have put great importance on cloud computing to drive Alibaba’s future growth. Current chairman and CEO Daniel Zhang told CNBC in a 2018 interview that cloud computing would be Alibaba’s “main business” in the future.
“Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud computing market as well as our years of investment in technology,” Alibaba CEO Daniel Zhang said in a press release.
South Korea Stocks Rise after Reports of Kia-Apple Deal
South Korean shares rose for a third straight session on Wednesday, as auto shares were boosted by reports of a possible $3.6 billion deal between Kia Corp and Apple Inc.
Kia Corp, an affiliate of Hyundai Motor Group, surged as much as 14.5% after local media reported the South Korean automaker and Apple will likely sign a deal in mid-February for the U.S. tech giant’s car production.
Hyundai Motor Co rose 2.5% as the country’s largest carmaker reported robust January global sales.
For a look at all of today’s economic events, check out our economic calendar.