(Sharecast News) - Asia-Pacific markets traded broadly lower on Monday as investors digested a pullback in US equities and a raft of weaker-than-expected economic data from China, prompting caution across the region.
Wall Street fell on Friday as traders took a breather from the AI-led rally, a move that Patrick Munnelly, market strategy partner at TickMill, said reflected "worries over tech company earnings and significant AI expenditures leading to a selloff on Wall Street," adding that "global appetite for risk has diminished due to concerns about whether tech companies, which have driven global indices to record highs, can sustain their inflated valuations amidst rapid AI spending."
Attention in Asia centred on China's November readings for retail sales, industrial output and fixed asset investment.
Tokyo benchmark led lower by AI plays
In Japan, equities were mixed as a sharp sell-off in AI-linked stocks weighed on the Nikkei 225, which fell 1.31% to 50,168.11, while the broader Topix edged up 0.22% to 3,431.47.
Japan Steel Works dropped 7.9%, Advantest slid 6.42% and SoftBank Group fell 5.95% as global tech sentiment cooled, with Tokyo Electron also down 1.1%.
Munnelly noted that investors were increasingly questioning whether to "scale back their AI investments in anticipation of a possible bubble burst or to double down in order to benefit from transformative technology," highlighting recent weakness in Nvidia shares and a drop in Oracle's stock after it flagged rising AI spending.
The declines came despite an improvement in domestic sentiment data, with the Bank of Japan's Tankan index for large manufacturers rising to +15 in the fourth quarter from +14, the highest level in four years and in line with Reuters expectations, while the non-manufacturing index came in at +34.
Chinese shares down on disappointing data
Chinese equities weakened after official data pointed to fading economic momentum in November, reinforcing concerns flagged in recent credit and activity figures.
The Shanghai Composite fell 0.55% to 3,867.92, with Harson Trading China down 10.01%, Yangtze Optical Fibre and Cable Joint Stock lower by 10% and Dalian Bio-Chem sliding 9.99%, while the Shenzhen Component dropped 1.1% to 13,112.09.
Industrial output rose 4.8% year on year, slowing from 4.9% in October and missing forecasts for 5.0%, marking the weakest growth since August 2024.
Retail sales increased just 1.3%, the weakest since December 2022 and well below expectations for a repeat of October's 2.9% rise.
Fixed asset investment fell 2.6%, disappointing forecasts for a 2.3% decline, while the house price index dropped 2.4% and the unemployment rate held steady at 5.1%.
Munnelly said China's November credit data showed "a rebound in government borrowing," with total social financing at CNY 2.49trn, including CNY 1.2trn from government bond issuance, while household loan growth slowed to "the weakest since 2011," underscoring how "the deflating housing bubble continues to strain household confidence."
Lynn Song, chief economist for Greater China at ING, said policymakers had made clear that domestic demand-led growth was the priority, but added that November's data showed "a lot of work remains," with downside risks building to a 5% year-on-year growth outlook.
Hong Kong stocks also declined, with the Hang Seng Index down 1.34% at 25,628.88, tracking broader regional weakness.
Losses were led by Hansoh Pharmaceutical Group, which fell 7.58%, Baidu, down 5.79%, and Kuaishou Technology, which slipped 4.45%.
South Korean markets underperformed, with the Kospi tumbling 1.84% to 4,090.59, echoing Munnelly's observation that "Asian markets fell on Monday, with South Korea, previously seen as a leader in AI enthusiasm, declining," as sentiment toward the sector cooled.
Iljeong Industrial plunged 14.29%, Hanjinkal dropped 10.18% and Woojin fell 7.81%.
Sydney declines, Wellington in the green
In Australia, the S&P/ASX 200 declined 0.72% to 8,635.00, with Ramelius Resources down 6.78% and Liontown Resources off 6.42%.
Shares in market operator ASX fell 5.68% after it said it would cut its dividend payout ratio to 75% to 85% of underlying net profit after tax following an additional AUD 150m capital charge imposed by regulator ASIC.
ASX said the payout ratio would be at the bottom end of the range for at least the next three dividends and flagged a discounted dividend reinvestment plan, while also downgrading its medium-term return on equity target to 12.5% to 14%.
The company's chair David Clarke said the panel's report was "challenging reading" but that the actions would provide a necessary reset, while federal treasurer Jim Chalmers said the findings raised "very serious issues" that required urgent action.
New Zealand's market was flat, with the S&P/NZX 50 edging up 0.01% to 13,408.14.
Serko rose 2.71%, KMD Brands gained 1.85% and A2 Milk Company added 1.48%.
Dollar mixed, oil prices little changes
In currency markets, the dollar weakened 0.45% against the yen to JPY 155.11, rose 0.13% versus the Aussie to AUD 1.5051 and gained 0.41% on the Kiwi to NZD 1.7291.
Oil prices were little changed, with Brent crude futures last down 0.07% on ICE at $61.08 per barrel, and the NYMEX quote for West Texas Intermediate off 0.12% at $57.37.
Looking ahead, Munnelly said markets faced a busy macro week, warning that "a quiet wind-down to Christmas is unlikely," with central bank decisions, key inflation data and high-profile political developments all set to shape sentiment.
Reporting by Josh White for Sharecast.com.
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