Home Business Markets ASX chases China down on first day of trade

ASX chases China down on first day of trade

2019 gets off to a bad start.

Jack Derwin

Digital Journalist, Your Money

Investors will be hoping that the first day of trade on the Australian sharemarket isn’t a sign of things to come.

The ASX 200 opened strongly on Wednesday only to fall on the back of worrying economic data, closing down 1.57 per cent to 5,557.8.

Part of the drop was attributed to ongoing property fears, as Australia’s housing market recorded a further 2 per cent fall in December.

The fall wasn’t helped by poor Chinese manufacturing data (the weakest in more than two years) which has again worried investors about the fallout from Trump’s trade war.

The announcement, in turn, weighed on the Australian dollar and sent Asian markets plummeting.

At one stage the Heng Seng had dropped more than two per cent, while the Shanghai Composite and Korea’s Kospi were both down around one per cent during the session.

It comes as 2018 wrapped up as a horror year for the Asia region, with more than $5 trillion collectively wiped from its equity markets.

$2.3 trillion of that loss stemmed from China, making Shanghai the world’s worst performing market last year, according to fund manager Brock Silvers.

“Chinese equities certainly had a terrible 2018 and, as you said, Shanghai was the world’s worst performing market but this wasn’t irrational, it wasn’t without reason,” the Kaiyuan Capital managing director said. 

“The Chinese economy is really slowing. In recent weeks we’ve seen both industrial and retail data come in at multi-year lows,” he told Trading Day. “The economy is slowing, there’s a trade war that isn’t showing any sign of abating, the currency is weakening [so] there’s lots and lots of bad news.

“I’m afraid that 2018 was very gloomy for Chinese equities and 2019 isn’t looking a whole lot better so far.”

Plus: Australia must prepare to lose China
Plus: What do when your shares take a plunge
Plus: China to wait out Trump presidency

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