Asia stocks fall tracking Wall Street, Chinese shares drop on weak factory data

Most Asian stocks were lower on Thursday tracking a subdued year-end performance on Wall Street, while Chinese stocks fell sharply after data showed a slower-than-anticipated rise in the country’s manufacturing activity.

Most major stock markets were closed a day earlier for the New Year holiday. Japanese and New Zealand markets remain shut.

U.S. stock index futures were lower in Asian trade on Thursday, after Wall Street declined at the end of 2024 as a “Santa Rally” largely failed to materialize.

Chinese stocks slump as manufacturing activity slows
China’s Shanghai Shenzhen CSI 300 fell 1.3% on Thursday, while the Shanghai Composite index declined 0.9%.

Chinese manufacturing activity saw weaker-than-anticipated growth in December, according to private purchasing managers’ index (PMI) data released on Thursday, suggesting that the impact of recent stimulus measures is waning.

The Caixin PMI results follow government data earlier this week, which also indicated that the manufacturing sector expanded in December but at a pace below expectations.

Markets are holding out for more clarity on Beijing’s plans for stimulus measures in the coming year. Recent reports suggested that the country will ramp up fiscal spending to support economic growth.

Hong Kong’s Hang Seng index slumped 1.7% with China’s Sun Art Retail (HK:6808) plunging more than 30% after Alibaba (HK:9988) said it would exit the firm by selling its majority stake for $1.6 billion.

Singapore shares muted after Q4 GDP
Singapore’s Straits Times Index was largely unchanged on Thursday.

Data showed that Singapore’s economy experienced minimal growth in the fourth quarter, weighed down by sluggish export demand and slowing growth in China. Although on an annual basis, the economy grew more than 4% in 2024.

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Gross domestic product rose 0.1% in the three months to December 31, substantially below the expectations of 2% and much slower than the 3.2% growth seen in the prior quarter.

While Singapore’s financial sector remained resilient, manufacturing faced persistent challenges from weakening overseas demand, particularly in the electronics sector.

Asia stocks lower after gains in 2024
Most Asian stock indexes posted yearly gains in 2024, however, markets are facing downward pressures from the last few months due to global uncertainty.

Incoming U.S. President Donald Trump has vowed to impose additional tariffs on China, which is expected to spark a potential U.S.-China trade war this year after Trump takes office later this month.

Additionally, the Federal Reserve’s December meeting signaled fewer cuts in 2025 as inflation remained a major concern, further dampening the outlook for Asian markets.

Malaysia’s FTSE KLCI index fell 0.4% on Thursday, while Philippine’s PSEi Composite lost 0.6%

Australia’s S&P/ASX 200 inched 0.4% higher, while India’s Nifty 50 Futures indicated a negative open for Nifty 50.

South Korea’s KOSPI index was largely unchanged amid ongoing political unrest in the country.

South Korea saw an unprecedented political crisis following President Yoon Suk Yeol’s December 3 declaration of martial law, which was swiftly retracted under parliamentary pressure.

Subsequently, Yoon was impeached and suspended from office in December, facing charges of insurrection and abuse of power. A Seoul court has issued an arrest warrant against him.