Pedestrians pass before a share prices board in Tokyo. The Nikkei closed 2.43% lower yesterday, losing all gains made so far this year.

AFP
Tokyo


Shanghai and Hong Kong led most Asian markets up in another volatile day yesterday after Chinese data showed imports and exports sank in August, adding to concerns about the economic giant that have convulsed global equities.
But news that Japan’s economy had contracted less than expected was unable to prevent a sharp fall in Tokyo, despite speculation the country’s central bank will likely have to unveil fresh monetary easing measures, which usually supports stocks.
The figures out of China and Japan are the latest to highlight the battle facing the world’s second and third biggest economies as Washington considers tightening monetary policy with US growth rattling along.
Analysts said the recent international market turmoil caused by worries over China—and uncertainty over US interest rates—had left investors nervous.
In Beijing the customs bureau said exports fell 5.5% year-on-year while imports plunged 13.8%.
While the export data was better than forecast and the import figure was affected by plunging commodity prices, the news is a concern owing to China’s role as the world’s biggest trader in goods and a crucial driver of global growth.
On Monday Beijing revised down its original reading for growth in 2014 to 7.3%, its slowest rate in a quarter of a century.
Yesterday’s result also comes despite a series of measures unveiled by authorities to halt a sharp slowdown in the economy, including five interest rate cuts since November and several reductions in the amount of cash banks must keep in reserve—each aimed at boosting lending.
Last month leaders surprised the world by devaluing the yuan, a move that sent shudders through financial markets.
“The trade data confirms the Chinese economy is still mired in a deepening slowdown and the measures the government is introducing to bring back stability are failing to encourage investors,” Ronald Wan, chief executive at Partners Capital International in Hong Kong, told Bloomberg News.
Thursday sees the release of further data, on inflation, retail sales and investment. Shares in Shanghai ended 2.93% higher at the end of a day of wild swings. The index fell as much as 2.25% at one point and was 3.06% up late afternoon business.
The mainland Chinese market surged more than 150% in 12 months before hitting a peak on June 12, when it began a crash that has seen it so far shed about 40%.
Authorities have unveiled various measures to shore up the exchange; the latest a decision to halt trading briefly if a gauge of major listed firms falls or rises 5%.
Analysts suggested the gains came thanks to heavy buying by government-backed agencies. Hong Kong recovered from a big morning loss to end up 3.28%, with a gauge of Chinese firms listed in the city surging.
In other markets Sydney—where several firms reliant on China business are listed—added 1.69%, while Singapore, Taipei and Wellington also enjoyed gains.
However, Japan’s Nikkei closed 2.43% lower, losing all gains made so far this year.
Markets have been in turmoil for weeks owing to the endless run of weak economic data out of China, withtns wiped off companies’ values around the world on fears the country is heading for a “hard landing”.
Adding to nervousness is the US Fed’s looming decision on whether or not to hike interest rates—a move that would tighten borrowing costs and investment opportunities.
The central bank’s call, expected later this month, has been muddied by the China crisis as well as a disappointing jobs report on Friday.
Japan yesterday said its economy shrank less than expected in April-June, although analysts said the figures were unlikely to ease pressure on its central bank to widen its bond-buying stimulus, which effectively prints money.
While the 0.3% contraction was better than the 0.4% first announced and the 0.5% forecast, Marcel Thieliant, Japan economist at Capital Economics, said “the details were hardly reassuring”.
“We stick to our view that the Bank of Japan will step up the pace of easing at its end-October meeting,” he added.
Tokyo is struggling to kickstart growth, despite a vast spending blitz and monetary easing drive to light a fire under prices and end almost two decades of painful deflation.
Talk of more yen being pumped into financial markets helped the yen reverse a morning sell-off. In afternoon forex trade, the dollar—which fell below ¥119 earlier—stood at ¥120.10, up from ¥119.34 Monday.