(MENAFN) Asian stocks, along with the yuan and the Australian dollar, experienced declines in response to the latest data, reflecting the sensitivity of these assets to shifts in Chinese demand. China's stock market rally, which had been ongoing since the pandemic, has lost momentum as small investors become bearish on equities and opt for safer assets amidst an uncertain economic recovery. The Chinese economy is grappling with a dual challenge of weakened domestic and international demand, which has had a ripple effect across the region.
Recent South Korean data revealed a worrisome trend, with shipments to China declining by 20.8 percent in May, marking a year of consecutive monthly declines. Particularly, semiconductor exports from South Korea witnessed a significant drop of 36.2 percent, indicating a weakened demand for components used in final manufacturing.
Similarly, Chinese imports of semiconductors fell by 15.3 percent, reflecting a softening market for consumer electronics exports that incorporate such components. The diminished demand for raw materials was also evident, as coal imports retreated from the 15-month high reached in March, primarily due to reduced appetite from the power and steel sectors. Additionally, copper imports in China registered a 4.6 percent decline compared to the previous year.
China's official Purchasing Managers' Index (PMI), released last week, further highlighted the economic challenges. Factory activity contracted at a faster pace than expected in May, as indicated by the PMI. The subindexes of the PMI revealed that factory output shifted from expansion to contraction, while new orders, including new exports, experienced a decline for the second consecutive month.
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