Asian Shares Fall Amid Risk Aversion

Asian stocks retreated on Friday as rising coronavirus cases, signs of a liquidity squeeze in China and persisting concerns over a retail trading frenzy in the United States triggered risk aversion.

Chinese shares ended lower as concerns over tight liquidity and loft valuations rattled investors. The benchmark Shanghai Composite Index slid 22.11 points, or 0.6 percent, to 3,483.07 despite the country’s central bank injecting 100 billion yuan into the financial system. Hong Kong’s Hang Seng Index ended down 267.06 points, or 0.9 percent, at 28,283.71.

Japanese shares ended lower due to position unwinding at the end of the month. Downbeat industrial production and unemployment data also dented sentiment.

Industrial production in Japan dropped a seasonally adjusted 1.6 percent sequentially in December, while the annual unemployment rate rose for the first time in 11 years, separate reports showed.

The Nikkei 225 Index tumbled 534.03 points, or 1.9 percent, to 27,663.39, marking its biggest fall since July 31 and slipping below its 25-day moving average price after Citron Research, a short-selling hedge fund caught in the short-squeezing of Gamestop shares, said it will make a major announcement later in the day. The broader Topix closed 1.6 percent lower at 1,808.78.

Canon fell 7.4 percent on profit taking after recent gains. The company said its fourth quarter net profit rose an annual 64 percent, helped by better demand for camera and inkjet printers in the second half of the year.

Likewise, chip-related firms fell despite announcing robust earnings. Advantest gave up 1.9 percent and Tokyo Electron shed 4.9 percent.

Australian markets fell for a third straight session as slumping iron ore prices pressured miners. The benchmark S&P/ASX 200 Index dropped 42.30 points, or 0.6 percent, to 6,607.40, while the broader All Ordinaries Index ended down 46.70 points, or 0.7 percent, at 6,870.90.

Miners BHP, Rio Tinto and Fortescue Metals Group lost 2-4 percent after China said it would lower steel production this year. Similarly, energy stocks Woodside Petroleum and Santos fell around 3 percent after China imposed travel restrictions to contain Covid outbreaks.

Lender NAB declined 1.6 percent after it agreed to buy out the neobank 86 400 in $220 million deal. The other three banks fell between 1.5 percent and 2.1 percent.

Healthcare stocks bucked the weak trend, with heavyweight CSL rising 1.8 percent. Industrial giants Aristocrat Leisure and Transurban rose 2.4 percent and 1.4 percent, respectively. Steelmaker Bluescope rallied 3.5 percent after delivering its second earnings upgrade in two months.

In economic news, official data showed private sector credit in Australia rose 0.3 percent month-on-month in December, accelerating from the 0.1 percent gain in November.

Seoul stocks tumbled as foreign investors dumped shares on concerns over stretched valuations and a liquidity squeeze in China. The benchmark Kospi ended down 92.84 points, or 3 percent, to close below 3,000, marking the largest single-day loss since August 20.

Market bellwether Samsung Electronics dropped 2 percent, chemical firm LG Chem declined 2.2 percent, automaker Hyundai Motor gave up 4 percent and pharmaceutical firm Samsung Biologics plunged 5.4 percent.

On the economic front, industrial production in South Korea advanced a seasonally adjusted 3.7 percent sequentially in December, Statistics Korea said. That beat forecasts for an increase of 1.2 percent following the 0.3 percent gain in November.

On a yearly basis, industrial production jumped 3.4 percent – again exceeding expectations for a gain of 0.9 percent following the 0.5 percent increase in the previous month.

The total value of retail sales in South Korea was up a seasonally adjusted 0.2 percent month-on-month in December, another report revealed. That followed the 1.0 percent contraction in November. On a yearly basis, retail sales dropped 2.0 percent after sinking 1.5 percent in the previous month.

New Zealand shares bounced back after a surprise sell-off the previous day. The benchmark NZX-50 Index rose 40.83 points, or 0.3 percent, to 13,127.29 after U.S. tech companies reported solid earnings.

U.S. stocks gained ground overnight after Q4 GDP data matched economist estimates and another report showed a bigger than expected decline in weekly jobless claims, suggesting a recovery in the labor market is underway.

The Dow Jones Industrial Average and the S&P 500 jumped around 1 percent, while the tech-heavy Nasdaq Composite rose half a percent.

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