Weekly Asia-Pacific Recap: China Facing Reform Measures, South Korea Battling COVID-19 Outbreak

The major Asia-Pacific stock indexes closed higher on Friday, but it wasn’t enough to offset the weekly losses. The South Korean KOSPI was the biggest loser for the week, while China’s Shanghai Index bucked the trend with a slightly higher close.

In the cash market for the week-ending August 21, Japan’s Nikkei Index settled at 22920.30, down 369.06 or -1.58%. South Korea’s KOSPI Index finished at 2304.59, down 102.90 or -4.27% and Hong Kong’s Hang Seng index closed at 25113.84, down 69.17 or -0.27%.

China’s Shanghai Index settled at 3380.68, up 20.58 or +0.61% and Australia’s S&P/ASX 200 Index finished at 6111.20, down 15.00 or -0.24%.

 

China Stocks End Week Higher; Techs Retreat Ahead of Reform Measures

China stocks ended higher on Friday and posted a weekly rise, as investors cheered a series of solid corporate earnings, though uncertainty over Sino-U.S. trade talks kept a check on gains.

Investors found some support from a series of strong first-half earnings from Chinese companies as Beijing ramped up stimulus support to revive an economy hammered by the COVID-19 crisis.

Bucking the broad strength, tech players lost ground for the week. The tech-heavy start-up board index and the STAR50 index dropped 1.4% and 2.4% respectively, as investors turned cautious ahead of the implementation of reforms measures for Shenzhen’s start-up board ChiNext, Reuters reported.

Last Monday, China’s central bank injected 700 billion yuan ($101.32 billion) of MLF loans, alleviating concerns over liquidity tightening following more signs of economic recovery.

Market participants were also watching out for developments on trade talks between Washington and Beijing.

South Korean Shares Plunge Most in 2 months on Infection Surge, Fed’s Gloom

The South Korean KOSPI lost 4.27% last week with most of its losses taking place on Thursday. Shares tumbled 3.7%, the sharpest fall in two months, as fears of rising domestic coronavirus infections persist, while a cautious outlook from the US Federal Reserve weighed on investor sentiment.

South Korean health officials are struggling to contain an outbreak of the new coronavirus centered in the capital city of Seoul, as new cases levelled off but remained in the triple digits on Thursday.

Prices were further pressured after the minutes of the Fed’s late-July meeting revealed its members are considering tweaks to monetary policy, while remaining concerned that the U.S. economy’s nascent recovery from the pandemic-induced recession faced an uncertain path.

Japan’s Nikkei Posts Weekly Decline

Technology stocks helped Japanese shares edge higher on Friday, but investors taking profits ahead of the weekend capped gains. Nonetheless, the Nikkei 225 Index still managed to post a loss for the week.

Driving last week’s selling pressure was the U.S. Federal Reserve’s minutes which showed that policymakers were concerned about the uncertain path of economic recovery from the coronavirus pandemic.

Minutes from the Fed’s July 28-29 meeting published on Wednesday showed policymakers judged that the swift rebound in employment seen in May and June had likely slowed and that additional “substantial improvement” in the labor market would hinge on a “broad and sustained” reopening of business activity.

For a look at all of today’s economic events, check out our economic calendar.