China’s robust retail sales in October, released on one of the nation’s biggest shopping days of the year, are brightening investors’ view that consumers can help offset a slowdown in the world’s number-two economy.
The Nikkei 225 inched up 20.13 points, or 0.1%, to 19,691.39,
In Hong Kong, the Hang Seng continued its slump, dumping 49.53 points, or 0.2%, to 22,352.17. Hong Kong’s Hang Seng Index is down 5.3% year-to-date.
Across the region, shares of retail businesses poised to tap into Chinese consumer demand have soared this year.
In Australia, baby formula maker Bellamy’s Australia Ltd. is up 17% so far this week amid expectations of increased shipping for Single’s Day. Shares have increased nearly sixfold year-to-date and gained 2.7% on Wednesday.
That compares with a 5% loss in the S&P/ASX 200 XJO, +0.46% year-to-date. The benchmark gained 0.5% on Wednesday.
Blackmores Ltd., which makes vitamins, gained 12.9% on Oct. 29, after the firm cited strong Chinese sales in its latest earnings report.
The company also said it would start selling baby formula to China. Shares of the firm, near a record high, were last up 1.1% on Wednesday. They have nearly quadrupled year-to-date.
In Japan, Kao Corp. shares are up 30.3% since the beginning of the year, compared with a gain of 12.8% for the Nikkei Stock Average
The firm makes diapers targeted at middle-class Chinese consumers with a taste for high-end products. The stock rose 1.7% Wednesday compared with the Nikkei’s gain of 0.1%.
Shares of Hong Kong-listed Tencent Holdings Ltd., for example, are up 34.7% this year and gained 0.7% on Wednesday.
Alibaba, listed on the New York Stock Exchange, will take the lion’s share of Wednesday’s profits from Internet sales.
In the first 90 minutes of shopping on Wednesday, Alibaba surpassed $5 billion U.S. in gross merchandise volume, compared with $2 billion U.S. in sales in the first hour last year. The e-commerce giant booked $9 billion U.S. in total sales on Singles Day last year, when 43% of gross merchandise volume came from mobile devices.
Alibaba’s shares finished flat in New York overnight and are down 22% this year. By contrast, the NASDAQ Composite is up 7% year-to-date.
CHINA
The CSI 300 in Shanghai nicked up 0.41 points to 3,833.65
China’s Singles’ Day, a blitz of e-commerce shopping, coincides with the release of a new batch of economic data, showing that retail sales rose 11% year-over-year in October, the fastest pace this year.
While a gauge of mainland-listed retail shares by Citic Securities Co. fell 1% Wednesday, it is up 44% year to date.
In recent weeks, China’s economic data has painted a discouraging picture, from sagging exports to slowing consumer prices. Economists and investors are scrutinizing the nation’s shopping habits for evidence China can transition to a consumption-driven economy from one dependent on infrastructure and investment spending.
Singles’ Day, a spree of promotions for online sales held annually on Nov. 11, is similar to Cyber Monday in the U.S. e-commerce giant
Alibaba Group Holding Ltd. started the day of shopping in 2009 to entice single people to buy things to pamper themselves. Today, most major e-commerce websites participate by offering deep discounts appealing to all shoppers.
To be sure, some of the gains in stocks of baby-related businesses came at the end of October, after China announced it would end its one-child policy after 35 years. All Chinese couples will be allowed to have two children, but the government didn’t offer a timeline for the policy’s rollout.
Chinese retail shares, meanwhile, won’t necessarily get a boost on Wednesday because the impact of Single’s Day has already been priced in.
On Wednesday, China reported retail sales in October accelerated to 11%from a 10.9% gain the previous month. China’s new car sales rose 13% from a year earlier in October, the biggest gain in the past 10 months, boosted by a government incentive program.
The relative strength of China’s consumer sector contrasts with performance in the traditional growth areas, like manufacturing and infrastructure.
Industrial output in October was up 5.6% on year, compared with a 5.7% rise the previous month. Fixed-asset investment, a measure of big-ticket purchases, in non-rural China rose 10.2% from the previous year in the January-October period, compared with a 10.3% increase in the first nine months of the year.
Meanwhile, regional stock markets remain under the sway of the Fed’s plans to raise rates. A rate rise would push up borrowing costs globally, pressuring sectors like property developers in Hong Kong, where the local dollar is pegged to the U.S. dollar.
In other markets
In Singapore, the Straits Times Index returned from holiday to lose 16.13 points, or 0.5%, to 2,981.59
The Kospi index in Korea poked up 0.68 points to 1,997.27
Taiwan’s Taiex index dropped 121.89 points, or 1.4%, to 8,415.01
The NZX 50 recovered 10.72 points, or 0.2%, to 6,013.53
The ASX 200 recouped 23.39 points, or 0.5%, to 5,122.62
