September is closing with Asian stock markets posting their worst monthly performance since the start of the pandemic.
The MSCI All Countries Asia ex-Japan index fell 12.9% for the month. The selling has been worst in major multinationals. The S&P Asia 50 index of blue-chips in Hong Kong, Korea, Singapore and Taiwan dropped 15.9% in September, significantly worse than the S&P Asia Pacific Broad Market Index, which lost 10.9%.
Alibaba Group Holding ( (BABA) and HK:9988) is characteristic of the performance of the mega-caps. It is down 15.5% for September, with Nomura estimating that Alibaba saw a 4% drop in Chinese e-commerce for the September quarter, leading to soft overall 3% growth in all its Chinese business.
Besides Russia's beleaguered stock market, Hong Kong has posted the worst performance in the world this month among major markets.
The Hong Kong benchmark, the Hang Seng, was one of the very few indexes to trade on gains here on Friday. It ended up 0.3% today, but that still left it nursing a 12.1% decline for September.
The Hang Seng is down a mammoth 26.0% so far this year. While that is similar in scale to the 24.1% decline in the S&P 500 in 2022, Hong Kong had already had a horrible 2021, with the Hang Seng Index the worst-performing major index that year, down 14.1%.
South Korean stocks, with a dependence on chipmakers, car companies and electronics exporters, also have had a bad month. The Kospi closed on an 11.4% decline in September.
Taiwan's market has performed a little better than its chip-driven peer. But the Taiex nevertheless fell 10.0% in September after a modest 0.8% dip today.
That is similar to the performance of U.S. markets, which have one day left to trade. The S&P 500 is down 9.9% in September, with the Dow Jones Industrial Average off 9.1% and the New York Stock Exchange Composite down 10.0%. Nasdaq is also down 9.1%.
It's interesting that those U.S. indexes are all posting similar performances despite their different makeups. It has been a wholesale selloff of all sectors and styles, a performance dominated by central bank decisions.
Japan has played defense with its hyper-accommodative monetary policy, although that is reflected in a decades-low point for the yen. The Topix broad market index in Tokyo, down 1.8% on the day, fell only 5.1% in September. That brings its decline this year to 9.6%.
On the positive side, Asia continues to open to travel and remove Covid restrictions.
The Hong Kong government today raised the cap on the number of people who can dine together or attend a group fitness class to 12, up from eight. The changes, which go into effect on Oct. 6, also increase the number of patrons in a bar allowed at one table to six, up from four, while banquet capacity at events such as weddings will double to 240. Hong Kong also lifted a ban on cruise ship travel.
The measures come one week after Hong Kong eliminated its mandatory hotel quarantine for international arrivals. The changes are aimed at easing travel and encouraging events such as a Hong Kong Monetary Authority banking conference as well as the Hong Kong Rugby Sevens, both due to take place in November.
Hong Kong markets will be open next week except for Tuesday, when there is the Chung Yeung Festival that traditionally is used for grave-sweeping by visiting the grave sites of your ancestors. South Korean markets are closed on Monday for National Foundation Day.
Before a weeklong trading pause, mainland Chinese shares briefly showed gains after the central bank injected C¥186 billion (US$26.2 billion) into the banking system through reverse repo short-term bonds. By selling bonds into the market and agreeing to buy them back in seven or 14 days, the People's Bank of China brought its total stimulus from that method this week to C¥868 billion (US$122.3 billion), the most since January 2019.
China celebrates its National Day on Oct. 1, leading into a week-long "golden week" holiday. So the central bank is lowering very short-term borrowing costs and ensuring liquidity before the break. Mainland financial markets will be closed all week.
That move created a choppy day of trade for the CSI 300 index of the largest stocks in Shanghai and Shenzhen. Despite repeatedly breaking above Thursday's close, Chinese shares suffered late selling and closed down 0.6% on the day. The CSI 300 fell 5.9% in September, with China like Japan on the accommodative side of the central bank spectrum and under little pressure with inflation a tame 2.5% for August, actually dipping from the 2.7% pace in July.
China on Oct. 16 will begin its once-in-five-years meeting to reshuffle its top leadership, including the likely re-election of President Xi Jinping to a precedent-breaking third term. Consequently, the central bank is also keen to keep markets settled before that event, officially called the 20th National Congress of the Chinese Communist Party.