Asian markets traded mixed on Monday as Australia gained after it appeared to dodge a possible downgrade for now of its treasured top sovereign rating and Japan fell despite better-than-expected trade data.
In Japan, the Nikkei 225 Index tailed off 9.55 points, or 0.1%, to close Monday at 19.391.60, breaking 11 straight session of gains. The Japanese benchmark has surged 6.1% since December 5.
The Hang Seng Index in Hong Kong plummeted 188.07 points, or 0.9%, to 21,832.68
Japan's November exports fell 0.4% year-on-year, compared to a poll expecting a 2% decline, boosted by a weaker yen and recovery in overseas demand.
Japanese imports fell 8.8%, also better than a forecast of a 12.6% decline. However, the trade surplus was narrower than expected at 153 billion yen ($1.3 billion U.S.), compared to a surplus of 227 billion yen expected. On Tuesday, the Bank of Japan will unveil its final policy review of 2016.
Investors will also eye the Bank of Japan's two-day monetary policy meeting starting on Monday and Hong Kong's November unemployment rate.
Australian markets perked as Australia Treasurer Scott Morrison announced a budget deficit of A$36.5 billion ($26.6 billion U.S.) in the current fiscal year ending June 30, 2017, or 2.1% of gross domestic product (GDP).
The budget shortfall was lower than the original prediction of A$37.1 billion (2.2% of GDP). Australia's budget deficit is also set to widen over the next four years.
Morrison also reaffirmed a pledge to return to surplus by June 2021, through spending cuts and tax hikes although not before wider deficits than previously forecast and with several of the most contentious measures previously blocked in the Senate.
Investors noted S&P Global said the budget update had no immediate effect on AAA (triple A) credit rating it has on a negative outlook, but warned the savings and taxes are needed to stem a possible downgrade.
The yen was stronger at 117.1 against the U.S. dollar as late afternoon, while the Australian dollar was at $0.73 after the national budget announcement.
CHINA
In Shanghai, the CSI 300 moved down 17.05 points, or 0.5%, to 3,328.98
China's efforts to cool the property market appear to be coming through, with November new home prices up 0.6% from the previous month, slowing from October's 1.1% increase.
China's largest property developer China Vanke fell to a four month low, down 6.1% to 21.10 yuan per share. The Shenzhen-listed company said on Sunday it would terminate a key deal to acquire a property development arm of Shenzhen Metro Group after failing to get approval from some shareholders
Markets also picked up on South Sea tensions after a Chinese warship seized last week a U.S. underwater drone in the South China Sea, which triggered a formal diplomatic protest and a demand for its return last Friday. The political fallout continued over the weekend even after Beijing agreed to return the drone, with U.S. President-elect Donald Trump taking jabs at China on Twitter.
In other markets
In Korea, the Kospi subtracted 3.85 points, or 0.2%, at 2,038.39
The Straits Times Index in Singapore fell 24.78 points, or 0.8%, to 2,913.08
In Taiwan, the Taiex Index sank 87.46 points, or 0.9%, to 9,239.32
The NZX 50 gained 26.01 points, or 0.4%, at 6,786.25
Australia's ASX 200 recovered 29.15 points, or 0.5%, at 5,562.08
