Tech gloom cast a shadow over Asian stocks on Friday, causing a flat-to-low range market dance. Investors juggled China’s stimulus measures with the gloomy outlook from chipmaking giant TSMC for the year ahead.
The National Development and Reform Commission in China made moves to boost spending in the automobile and consumer electronics sectors, promising more policy support from Beijing. It was a response to the slowdown in the Chinese economic recovery during the second quarter.
Hong Kong’s Hang Seng index outshone the rest of Asia, rising 0.7% on the strength of locally-listed Chinese stocks. However, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes traded sideways, giving up most early gains. All three indexes were still set to lose over 1% for the week, but they managed to trim some of those losses on Friday.
As fund managers grew less optimistic about China’s economic rebound this year, weak indicators and limited policy support weighed heavily on the market. Bank of America economists issued a warning that local stocks could test 11-year lows as the post-COVID economic rebound loses steam.
Unfortunately, China’s struggles were not limited to its own markets. Asian markets that heavily depend on China as a trading hub also suffered.
Broader Asian stocks faced obstacles due to the weakness in heavyweight technology shares. A slide in major U.S. technology stocks from the previous day provided a somber backdrop, following disappointing results from Netflix and Tesla.
Taiwan Semiconductor Manufacturing Co (TSMC), Asia’s most valuable company, took a hit, sinking 3% after reporting a 23% drop in second-quarter profit. The company also issued a warning that its sales and profits were likely to decline further this year. TSMC wasn’t alone in its grim forecast, as Hong Kong’s Sunny Optical Technology Group, a smartphone component manufacturer for major brands, predicted a staggering 70% profit decline in the first half of 2023.
Tech-heavy Asian bourses faced retreats, with South Korea’s KOSPI down 0.1%, and Taiwan’s Weighted index sliding 0.7%. In Australia, the ASX 200 fell 0.3% amidst concerns over slowing commodity demand in China.
Meanwhile, in Japan, the Nikkei 225 fell 0.1%, while the broader TOPIX remained flat as data revealed Japanese consumer inflation stubbornly persisted through June. Such a trend could attract policy tightening by the Bank of Japan.
On a brighter note, Indian stocks continued to shine, outperforming throughout the week, with the Nifty 50 and BSE Sensex 30 indexes notching record highs for four consecutive sessions.