China’s major stock indexes reboundeod on Thursday, bucking the broader Asia market sell-off, while Australia’s benchmark index dropped to its lowest level in over a year.

The Shanghai Composite index rose 0.48% to close at 2,988.30 points, supported
by gains in financial and resource stocks. The blue-chip CSI300 index climbed
0.28% to 3,514.14. This was in stark contrast to other major Asia-Pacific
markets that saw sharp declines.

The selloff in the broader region came after disappointing quarterly results
from Google-parent Alphabet dragged the S&P 500 below the key 4,200 level,
falling 1.43% to 4,186.77 on Wednesday. This prompted investors in Asia to
dump riskier assets.

South Korea’s KOSPI index tumbled 2.71% to 2,299.08, its lowest point since
January 6th. The tech-heavy KOSDAQ plunged 3.5% to 743.85, the weakest since
January 31st. Chipmaker SK Hynix sank 3.92% after reporting a $1.61 billion
net loss in Q3, reversing a profit of $1.11 billion a year earlier.

Japan’s Nikkei 225 dropped 2.14% to end at 30,601.78, while the Topix index
declined 1.34% to 2,224.25. This extended the previous day’s losses.

In Australia, the benchmark S&P/ASX 200 index slumped 0.61% to close at
6,812.30, its lowest settlement since October 28, 2021. The index was dragged
down by healthcare and technology stocks. Higher-than-expected inflation data
also dampened sentiment.

Hong Kong’s Hang Seng traded down 0.24% in afternoon deals after moving
between small gains and losses through the session.

“Sentiment across Asia is broadly negative today after a sharp selloff in US
markets overnight. China is the outlier with stocks in positive territory,”
said Han Tan, chief market analyst at Exinity.

The relative strength in mainland Chinese equities came despite ongoing
concerns over President Xi Jinping’s consolidation of power at the Communist
Party Congress and the weak economic outlook. Investors appeared to be bargain
hunting after heavy losses earlier in the week.

Tesla Rival Xpeng Presses Ahead With Driver-Assist Rollout in China, Europe

Chinese electric vehicle maker Xpeng said this week it remains on track to
deploy its driver-assist technology in 50 cities across China by the end of
2022. The company also plans to roll out the tech in Europe by end-2023,
setting up a rivalry with Tesla’s Full Self-Driving system.

Xpeng’s advanced driver assistance system, called XPilot, will need time for
testing and localization before it can be introduced in Europe, according to
vice chairman Brian Gu. He declined to provide an exact timeline.

The company claims its HD mapping and multi-layer perception algorithms allow
XPilot to handle complex urban driving conditions. However, the technology
still requires continuous driver supervision and is not fully autonomous.

Xpeng trails Tesla in terms of EV sales and autonomous tech development. But
it has been making steady progress, delivering over 98,000 vehicles in 2021
and launching the new advanced P5 model this year.

Tesla’s Full Self-Driving Beta system can recognize stop signs and traffic
lights, automatically change lanes, park, and overtake slower vehicles. But it
is still considered a Level 2 driver-assist feature despite its name.

Full autonomy still faces regulatory hurdles, with safety being a major
concern. Earlier this month, a Tesla vehicle crashed into a motorbike in China
while on Autopilot, resulting in the death of a high school girl.

As the EV market grows more competitive, Chinese players like Xpeng and Nio
are ramping up investment in next-gen technologies like smart driving
assistance. Whoever masters full self-driving first could gain a major edge
over rivals.

Japan, South Korea Stocks Plunge Over 2% Following Wall Street Slump

Equities in Japan and South Korea fell sharply on Thursday, with both
countries’ major stock indexes dropping over 2%, as investors took cues from
an overnight sell-off on Wall Street.

Japan’s Nikkei 225 plunged 2.13% to 27,311.33 while South Korea’s KOSPI index
slipped 2.2% to 2,290.00 — its lowest level since early January.

The tech-heavy KOSDAQ index in South Korea tumbled over 3% to hit its lowest
point since mid-2020. Shares of South Korean tech firms skidded, compounded by
a 3.63% fall in chipmaker SK Hynix after disappointing quarterly results.

Overnight, the S&P 500 fell 1.43% after Google-parent Alphabet posted
disappointing earnings, dragging the tech-heavy Nasdaq down 2.43%. Rising
Treasury yields also weighed on sentiment.

“There are concerns surrounding U.S. tech earnings while U.S. yields also
rebounded overnight, hitting sentiment across the region,” said Yeap Jun Rong
of IG.

Earlier data showed South Korea’s economy grew a seasonally-adjusted 0.3%
quarter-on-quarter in Q3, up from 0.7% growth in the previous quarter but
slightly below expectations.

With recession fears looming and monetary policies tightening globally,
analysts expect further volatility in Asian markets going forward.

“In the third quarter, we saw significant sell-offs in equities…This situation
is likely to continue,” said Toru Nishihama, chief economist at Dai-ichi Life
Research Institute.

Australia Shares Sink to 1-Year Low; Aussie Dollar Weakens

Australia’s benchmark S&P/ASX 200 index plunged to a fresh one year low on
Thursday, dropping 0.88% to hit 6,777.5, surpassing its previous October 28,
2022 low of 6,785.7.

Dragged down by healthcare and technology stocks, the index has now given up
all its pandemic recovery gains. Rising interest rates, high inflation and
recession worries dampened investor sentiment.

Earlier data showed Australia’s Q3 consumer price index rose 1.8%
quarter-on-quarter, exceeding forecasts of 1.6% growth. This raises
expectations that the Reserve Bank of Australia will continue its aggressive
rate hike cycle.

The Australian dollar also tumbled 0.55% against the U.S. dollar to 0.6275,
its weakest level since October 2021. Surging inflation, declining exports and
slowing growth have weighed heavily on the Aussie dollar.

“The underlying picture in Australia is deteriorating. Alongside contracting
exports, surging prices are squeezing real wages and profits,” said Sean
Langcake of Oxford Economics.

With the Fed expected to keep rates higher for longer to tame inflation,
analysts see further near-term pain for Australian equities and the local
currency.

However, falling commodity prices could eventually help ease price pressures,
allowing the RBA to slow its tightening pace and provide some relief. But
markets will remain sensitive to inflation and growth data in the coming
months.

Summary

Asia-Pacific markets experienced broad losses on Thursday following Wall
Street’s overnight retreat. Australia’s benchmark index sank to a fresh
one-year low as stagflation worries intensified after hotter than expected
inflation data.

China was the outlier, with stocks in Shanghai and Shenzhen reversing losses
as investors picked up bargains. Stocks in South Korea and Japan saw steep
declines of over 2% each, while Hong Kong wavered between small gains and
losses.

The relative strength in mainland Chinese shares came even as economic
uncertainties mount, with President Xi Jinping consolidating power and Covid
restrictions weighing on growth.

Rising interest rates, recession fears and geopolitical tensions are likely to
further increase volatility across Asian markets in the near term. Investors
await upcoming central bank decisions and key data for clues on the region’s
economic trajectory.

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