Two closely watched barometers of China's factory activity released on Tuesday were at multi-year lows, reviving concerns about the state of the country's economy which caused a major sell-off on the world's financial markets last week.
China's official manufacturing index based on a survey of factory purchasing managers fell last month to 49.7, the lowest level since August 2012, from 50.0 in July. The index, compiled by the Chinese Federation for Logistics and Purchasing, is based on a 100-point scale on which numbers above 50 indicate expansion.
A separate survey, the Caixin purchasing managers' index, fell to a six-year low of 47.3 from 47.8 in July. The number was slightly better than the preliminary reading released last month.
Caixin's survey focuses on smaller, private enterprises while the federation's survey is weighted toward larger, state-owned companies in China's manufacturing industry, which employs tens of millions. Taken together, the surveys provide a bleak picture of stubborn weakness in the overall economy.
Investors are cautiously awaiting for Friday's release of U.S. non-farm payrolls data for signal whether or not the U.S. Federal Reserve may raise interest rates in September. Bets on a September U.S. interest-rate increase climbed after Federal Reserve Vice Chairman Stanley Fischer said over the weekend there is good reason to believe inflation will accelerate and that the Fed should not wait until it hits its inflation goal to act. Investor attention will focus this week on the U.S. August jobs report, due Friday, as the last major data point before the Fed's meeting on Sept. 16-17.
Among Asian bourses
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Australia market tumbles on global rout
The Australian share market declined further, as risk aversion selloff sparked by a weak lead from Wall Street and on disappointment after the Reserve Bank of Australia's kept interest rate unchanged. Meanwhile, selloff momentum intensified after China's official and private sector PMI gauges showed weakness across manufacturing and service industries. All ASX sectors posted losses, with financial, technology, energy, materials, and consumer staples stocks being major drag of the day. The benchmark S&P/ASX 200 index stumbled 110.60 points, or 2.12%, to 5096.40 points. The broader All Ordinaries index closed 105 points, or 2.01%, down at 5117.10.
Shares of material and energy companies were major drag on the benchmark ASX bourse due to weakness in commodity metal prices. BHP Billiton dropped 2.1% to A$24.65 and Rio Tinto lost 1.8% to A$49.37. Oil and gas heavyweight Woodside Petroleum declined 2% to A$31.62, Origin Energy retreated 1% to A$8.18 and Oil Search lost 0.9% to A$6.74.
Banks and financial stocks continued southward move, with all the major banks being major loser, after the Reserve Bank of Australia kept its benchmark rate steady at 2%. Australia & New Zealand Banking Group led losses among major banks, down 3.1% to A$27.07, meanwhile National Australia Bank fell 2.5% to A$30.40, Westpac Bank dropped 2.9% to A$30.20, and Commonwealth Bank sank 2.4% to A$73.30.
Myer placed its shares in a halt after it announced a A$221 entitlement offer in a bid to fund its A$600 million, five year turnaround strategy. It came after the department store chain posted a 21 per cent fall in underlying net profit to just A$77.5 million, and downgraded its 2016 earnings outlook.
Nikkei stumbles in sea of red
The Japanese share market stumbled, as broad-based sell-off was sparked by a weak lead from Wall Street overnight and exacerbated by Chinese manufacturing data, which fell to its lowest reading in three years. Selloff momentum worsened by yen appreciation to 120-level against greenback and by capital expenditures data that showed slowing investment in plants and equipment by Japanese companies. All 33 TSE sectors ended down, with shares of pharmaceutical, precision instruments, financials, utilities, tyre makers, consumer goods, and nonferrous metal issues being major drag on the market. The Nikkei Stock Average tumbled 724.79 points, or 3.84%, to end at 18165.69 points, following a 1.3% loss on Monday. The broader Topix index ended down 3.83%, or 58.94 points, to 1478.11 at the close in Tokyo.
Results of a quarterly survey of major companies on capital spending and corporate profits released on Tuesday by the Ministry of Finance, showing combined capital investment by non-financial Japanese companies up 5.6% on year in the April-June quarter, marking the eighth straight year-on-year rise but the pace of increase decelerated from 7.3% in January-March.
Export-related stocks were major drag on the Tokyo market as the yen strengthened against the dollar. The yen gained for a second day, adding 0.6% to 120.49 per dollar. A higher yen is typically negative for Japanese exporter stocks. Toyota Motor Corp dropped 2.7%, while TDK Corp, which gets 91% of revenue abroad, slid 6.9%. Electronic parts-maker Yaskawa Electric Corp. lost 3.6%.
Pharmaceuticals stocks were down. Takeda Pharmaceutical fell 4.4% while Astellas Pharma dropped 5.8% and Eisai fell 7.5%. Shares of food companies were also down, with Japan Tobacco falling 4.1% and Meiji Holdings shedding 6.2%.
Topcon fell 3.4% after Toshiba, its biggest investor, said it plans to sell its 30% stake in the company for 50 billion yen ($415 million) to 60 billion yen.
Toshiba Corp lost 5.3% after the company again delayed filing its earnings for the fiscal year ended in March, citing it has found possible additional irregularities at several subsidiaries. It was expected to report the results Monday.
China Stocks extend losses on weak factory data
Mainland China's stock market slipped further into the sea of red, on intensifying concerns about the world's second largest economy after factory activity continued downtrend in August, touching a nadir since August 2012. Most of the blue-chip stocks declined, with stocks in the textile machinery, automobile manufacturing and the steel industry lost most. The Shanghai Composite Index was down 39.36 points, or 1.23%, to close at 3166.62. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 4.61%, or 82.53 points, to 1707.78. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, lost 5.38%, or 107.37 points, to close at 1889.49.
Investors largely ignored fresh stimulus measures unveiled by the Beijing, including further relaxation in property investment rules, and policies to support mergers and acquisitions and share buy-backs by listed companies. Facing lingering downward risks, authorities have ramped up efforts to prop up the economy and promote the steady and healthy development of the capital market. On Monday evening, the central government issued a notice encouraging mergers, cash bonuses and share repurchases by listed companies to expedite reform of state-owned enterprises and stabilize the stock market. China's banking and housing regulators slashed down payment requirements on Monday evening for second home purchase using provident funds to 20% from 30%, as long as the buyers have paid off their mortgages on the first home.
Shares of technology and consumer-discretionary companies slid most among 10 SSE sector groups. Yonyou Network Technology Co. retreated 6.8%. Shanghai Wangsu Science & Technology Co. lost 5.6%. Suning Commerce Group Co. dropped 10%.
Hong Kong market sinks as China PMI data worsen
Hong Kong stock market ended sharply lower, dragged down by concerns over the pace of China's economic growth and its potential implications for the rest of the world after China's official and private sector PMI gauges showed weakness across manufacturing and service industries. The Hang Seng Index (HSI) opened up 22 points at 21,692, which marked the intra-day high. It closed down 101 points in morning session, and saw its losses widen to close to 500 points at one stage in afternoon session when HKD exchange rate rose to the strong side of the convertibility undertaking. The Hang Seng Index ended down by 485.15 points, or 2.24%, at 21185.43 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, sank 287.30 points, or 2.95%, to 9454.11 points. Turnover reduced to HK$94.5 billion from HK$113 billion on Friday. Turnover reduced to HK$85.8 billion from HK$94.5 billion on Monday.
Mengniu Dairy (02319) plunged 7% to HK$25.25 after research houses lowered their target prices for the company.
CITIC (00267) slid 5% to HK$13.42 on news that Australian mining baron Clive Palmer launched a A$10 billion lawsuit against its estranged Chinese partner.
Aviation carriers bore the brunt of higher costs. Crude oil prices have rebounded for three consecutive trading days, with Brent crude jumping more than 8%. China South Air (01055) dived 13% to HK$4.41. China East Air (00670) and Air China also crashed 8%.
Sensex, Nifty slumps
Banking and metal stocks led sell-off on the bourses. The barometer index, the S&P BSE Sensex, was off 624.81 points or 2.38% at 25,658.28, as per provisional closing data. The 50-unit CNX Nifty was down 185.45 points or 2.33% at 7,785.85, as per provisional closing figures. Data showing slowdown in India's economic growth and weakness in global stocks hit sentiment on the domestic bourses adversely.
Canara Bank fell 6.59% after the bank's board of directors approved reduction in the base rate by 10 basis points to 9.9% from 10% with effect from 3 September 2015. The announcement was made after market hours yesterday, 31 August 2015.
Bank of Baroda lost 6.31% to Rs 173 after the bank said it has fixed issue price at Rs 192.74 per share for preferential allotment of shares to the Government of India (GoI). GoI will infuse capital funds to the tune of Rs 1786 crore in Bank of Baroda through the preferential allotment of equity shares.
Punjab National Bank tanked 7.28% after global credit rating agency Fitch downgraded the bank's Viability Rating by one notch to 'bb', citing growing risk to the bank's capital position from its mounting stressed assets. Fitch believes that PNB's recovery could prove to be more protracted than other similar-sized peers because of large stressed assets.
Metal and mining shares edged lower after twin surveys showed China's manufacturing sector in the grip of its worst slump in several years. Jindal Steel & Power (down 3.98%), Hindustan Copper (down 3.85%), Steel Authority of India (down 6.39%), Hindalco Industries (down 5.62%), Tata Steel (down 3.98%), NMDC (down 0.5%), JSW Steel (down 2.38%), Vedanta (down 4.46%) and Hindustan Zinc (down 1.1%), edged lower. National Aluminium Company was unchanged at Rs 32.30. China is the world's largest consumer of steel, copper and aluminum.
India's gross domestic product (GDP) grew 7% in Q1 June 2015, slower than 7.5% expansion registered in Q4 March 2015, according to the data released by the government after trading hours yesterday, 31 August 2015. Another data showed slowdown in core sector growth in July 2015 to 1.1% in July 2015 from 3% growth in June 2015. Meanwhile, the outcome of a monthly survey showed slowdown in growth in India's manufacturing sector last month.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index sank 1.9% to 8017.56. South Korea's KOPSI dropped 1.4% to 14.23. New Zealand's NZX50 fell 0.02% to 5654.99. Singapore's Straits Times index slipped 1.3% at 2882.77. Indonesia's Jakarta Composite index grew 2.2% to 4412.46 Malaysia's KLCI added 0.2% to 1609.21.
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