Chinese manufacturing growth beat analyst estimates in November, indicating the nation's economic recovery is sustaining momentum amid government efforts to rein in credit growth. The Purchasing Managers' Index stood at 51.4, an 18-month high, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Sunday. A sub-index for export orders nudged higher to 50.6 in November from 50.4 in October, hovering above the 50-point threshold separating growth from contraction.
A separate gauge from HSBC Holdings Plc and Markit Economics today also indicated a reading above the 50 level dividing expansion from contraction. The HSBC China Manufacturing Purchasing Managers' Index had a final reading of 50.8 in November, compared with 50.9 in October. The results of the manufacturing Purchasing Managers' Index, released Monday by HSBC and Markit, showed the fourth straight month of rising production, with the growth at its fastest rate since March. The report indicated that production "was largely driven by domestic demand," as new export orders rose at only a fractional pace.
Risk sentiments bolstered further on gaining confidence over recovery in the euro zone debt laden countries after credit rating agency upgraded its rating on Greece and Spain.
Ratings agency, Moodys, has upgraded Greeces credit rating by two notches from C to Caa3 because of improved results in the country's economic adjustment programme. "Moody's expects that the government will achieve (and possibly outperform) its target of a primary balance in 2013, and record a surplus in 2014 in accordance with the adjustment programme," the agency said. "Based on the government's budget execution record up until October, Moody's believes that [its] deficit target is likely to be within reach."
Standard & Poors is the second of the three main credit ratings agencies to lift its outlook for the Spain in less than a month after Fitch also switched to stable from negative in early November. The agency affirmed Spain's BBB-/A-3 long and short-term foreign and local currency sovereign credit ratings and said Spain's external position was improving as economic growth gradually resumes.
Market gains were, however, limited as investors' cautiously awaited key U.S. economic data this week. Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 on Friday, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.
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The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
Among Asian bourses, Japanese financial market finished tad higher after fluctuating in narrow range, with gains in the utilities were offset by weakness in energy stocks.
Volume turnover in Tokyo market was light as participants mainly foreigners were slow to return from the U.S holiday break. Many overseas market participants were inactive after the extended Thanksgiving holiday weekend.
Investors largely shrugged off an upbeat data on capital spending among Japanese firms. Data released on Monday from the finance ministry showed Japanese companies rose spending on factories and equipment by 1.5% in the July-September quarter. However, the slow pace of the increase cast some doubt on whether capital spending is as strong as needed to help sustain economic growth.
Bank of Japan Governor Haruhiko Kuroda said on Monday he saw no need to water down the bank's commitment to achieve 2% inflation in two years, stressing that the country was on track to meet the target despite risks from soft overseas growth. He also signalled the bank's readiness to maintain its ultra-loose policy for as long as needed to sustainably achieve the inflation target, or expand stimulus further if the economy and prices sharply undershoot its forecasts.
The BOJ's commitment to ultra-easy monetary policy as it shoots for this goal has kept pressure on the yen, though it held its ground on Monday. The dollar was steady at 102.43 yen, after it touched a six-month high of 102.61 yen on Friday.
Shares of utility companies led advances in Tokyo, with Electric Power Development rising 4.5% to 3160 yen, as Mizuho Securities Co. rated the company a buy. Sega Sammy jumped 5.6% to 2851 yen while Gurunavi surged 18% to 2970 yen.
In Australia, shares in the Australian financial market declined, dragging the benchmark S&P/ASX 200 index down by 40.50 points to finish at 5279.50.
The selloff in the Aussie market continued for second consecutive session on caution before the Reserve Bank decision on interest rates on Tuesday and a flurry of initial public offerings coming to market over the coming fortnight.
The Reserve Bank will be meeting tomorrow to make an interest rate decision. Dick Smith will be making its market debut on Wednesday while Nine Entertainment will be listing on Friday.
Meanwhile, risk aversion selloff also flared by unexpected fall in domestic manufacturing index data. The Australian Industry Group's Performance of Manufacturing Index for November slipped by 5.4 points to 47.7 - indicating the local manufacturing sector is once again contracting after two months of expansion.
Australian major banks and financials were sharply lower, with Commonwealth Bank declining 1.3% to A$76.85, Westpac Banking Corp 0.9% at A$32.60, Australia & New Zealand Banking Group 0.2% to A$31.85, and National Australia Bank 0.9% to A$34.31.
Australian materials and resources shares declined, with gold miners the exceptions. BHP Billiton eased 1.3% at A$36.90 and Rio Tinto 0.3% to A$65.85, while Fortescue Metals shares fell 1.9% to A$5.57. Newcrest (NCM) benefited from a firmer gold price, ending 1% higher at A$7.77.
Coca-Cola Amatil share added 0.2% to A$12.11 on news that GrainCorp Chief Executive Alison Watkins was set to take over the top post at the bottler. Shares of GrainCorp fell 3.6% to A$8.41 on news of Watkins' departure.
Grocery wholesaler, Metcash (MTS) shares grew 7.5% to A$3.28 after announcing a 20% lift in first half profit to A$98.9 million. Its exit from Franklins supermarkets (integration with IGA) is helping with its cashflow.
Australian Bureau of Statistics data showed new building approvals hit a record high of A$7.61 billion in November with residential building also at record highs, indicating continued growth in the mortgage market that drives earnings for the retail banks. Another report from the ABS showed that company profits rose a larger than expected 3.9 per cent in the September quarter.
In China, shares in the Chinese financial market drifted lower in heavy volume, with Shanghai Composite dropping 13.13 points to finish at 2207.37, while the CSI 300 Index fell 20.15 points to 2418.79.
Selling pressure dominated across the board in the Mainland China, with small cap companies posting the biggest drop, amid liquidity drain woes after the securities watchdog announced on Saturday that China will resume initial public offerings in January after a freeze of more than a year. The watchdog also unveiled a reform plan for new listings that's aimed at boosting the country's stock market over the long term.
China's securities regulator, which has banned IPOs for more than a year to reduce fraud and prevent a flood of supply from dragging down the market, said on Nov. 30 that 50 companies will be ready for new share sales by the end of January. Policy makers are lifting the ban amid a 12% rally in the Shanghai Composite from this year's low in June, signs of a pickup in economic growth and pledges by the ruling Communist Party to increase the role of markets.
There are more than 760 companies in the queue for approval and it will take about a year to complete an audit of all the applications, the CSRC spokesman said. The spokesman said the reforms would give the market a greater role in determining the timing and number of IPOs. The CSRC also proposed drafting rules for a trial program to allow companies to sell preferred stock, based on guidance issued Nov. 30 by the State Council. Banks will be able to include preference shares in calculations of Tier-1 capital, giving them a new financing avenue to meet requirements for risk buffers, while helping reduce corporate debt levels, CSRC spokesman Deng Ge said in a separate statement.
Shares of information technology issue declined the most in the SSE sectoral pack, with software maker Neusoft Corp declining 9.2% to 12.95 hyuan. Leshi Internet Information & Technology Co. locked 10% lower circuit at 38.66 yuan.
Shares of financial issue gained the most in SSE sectoral pack, on the back of Goldman Sachs Group Inc. statement that financial companies such as banks and brokerages would benefit from IPO reform. Industrial & Commercial Bank of China Ltd. led a rally for lenders, adding 1.8% to 3.87 yuan. Agricultural Bank of China Ltd. rose 1.9% to 2.67 yuan. Citic Securities Co., the biggest-listed brokerage, jumped 5.1% to 13.56 yuan. Haitong Securities Co., the second largest, advanced 5.5% to 12.41 yuan.
China's money markets rates surged from yesterday level on Monday on liquidity squeeze woes after report saying government's planning to restart initial public offerings. The seven-day repo, a gauge of borrowing costs among banks and usually watched as an indicator of liquidity stress, traded at a weighted average of 6% by late afternoon compared with 3.75% prior day.
In Hong Kong, shares in the HK market climbed on the back of better than forecasted Chinese manufacturing data and credit rating upgrade of the Greece and Spain from major rating agency., sending the benchmark Hang Seng Index higher by 157.26 points to 24038.55 while the Hang Seng China Enterprises Index climbed up 106.80 points to 11548.07.
Among the HK 50 blue chips, 37 stocks rose and 11 fell, with 2 stocks remaining steady. Market heavyweights were firmer. Both HSBC Holdings (00005) and China Mobile (00941) inched up 0.5% to HK$87.05 and HK$83.9.
Shares of brokerages advanced the most in Hong Kong market after the Chinese government unveiled guidelines that could pave the way for more initial public offerings in China. Citic Securities (06030) and Haitong Securities (06837) jumped 10% and 5.7% to HK$21.6 and HK$14.18, respectively. Elsewhere, Citic Pacific (00267) soared 7% to HK$11.96, making itself the biggest blue-chip winner. The company's Australian project has started the first shipment of iron ore concentrate.
In South Korea, shares in the Seoul market declined, with the benchmark KOSPI Index fell 0.7% to 2030.78, as reports showed that the annual inflation rate quickened to 0.9% in November from 0.7% in October and manufacturing growth accelerated.
In India, Indian benchmark indices finished modest higher after the outcome of a business survey showed that India's manufacturing activity returned to growth in November 2013 as a strong rise in orders pushed factories to step up production. The market sentiment was also boosted by data showing that foreign funds remained net buyers of Indian stocks on Friday, 29 November 2013. The barometer index, the S&P BSE Sensex, was provisionally up 107.74 points or 0.52%, up close to 130 points from the day's low and off about 40 points from the day's high,
Shares of infrastructure companies raised the most in Indian market after the Securities and Exchange Board of India (Sebi) on Friday, 29 November 2013, relaxed fundraising rules for infrastructure debt mutual funds in its continued bid to channel long-term capital to finance infrastructure projects in the country. L&T gained after the company said it is evaluating alternatives for monetisation of certain assets of its subsidiary L&T Infrastructure Development Projects (L&T IDPL), including a potential initial public offering and listing in Singapore of selected road assets of L&T IDPL, through a business trust in Singapore. Metal stocks edged higher as manufacturing in China continued to grow last month. PSU OMCs rose after raising diesel prices.
Indian manufacturing returned to growth last month as a strong rise in orders pushed factories to step up production, a business survey showed on Monday, suggesting a slow economic recovery is on its way. The HSBC Manufacturing PMI, compiled by Markit, rose to 51.3 in November from October's 49.6. The PMI index is the highest since March and marks its first time above the watershed level of 50 that divides growth from contraction in four months. The new orders sub-index rose to 51.9 last month, it's highest since April. In October it shrank to 48.9.
Elsewhere in the region, New Zealand's NZX50 declined 0.05. Singapore's Straits Times index rose 0.4%. Indonesia's Jakarta Composite index rose 1.53%. Taiwan's Taiex index added 0.1%. Malaysia's KLSE Composite rose 0.3%.
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