Asia Pacific share market dived into sea of red on Tuesday, April 23, 2013, as wave of risk aversion selloff flared broadly after disappointing readings on Germany's and China's manufacturing sectors added to concerns about the outlook for the global economy. Meanwhile slump in profits and cut in guidance at industrial heavyweight Caterpillar further fueled selloff.
The massive decline came after the HSBC Holdings Plc and Markit Economics announced today that China's manufacturing activity growth may have slowed to a two-month low in April. HSBC Flash China Purchasing Managers' Index, the earliest indicator of China's economic condition, dropped in April to 50.5, compared with March's final PMI of 51.6. The index is a gauge of manufacturing activity slanted more towards private and export-oriented firms. A reading of 50 or above means the activity is expanding.
Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said The HSBC Flash China Manufacturing PMI came in at a two-month low, but still managed to expand modestly in April, albeit at a much slower pace. However, new export orders contracted after a temporary rebound in March, suggesting external demand for China's exporters remains weak. Weaker overall demand has also started to weigh on employment in the manufacturing sector. Beijing is expected to respond strongly to sustain the economic recovery by increasing efforts to boost domestic investment and consumption in the coming months
Meanwhile, Flash Germany Composite Output Index posting 48.8 in April, below the crucial 50.0 no-change value and down from 50.6 in March. The latest reading indicated a moderate reduction in private sector business activity, with the pace of decline the fastest since October 2012. The manufacturing and service sectors both registered renewed falls in output levels during April, with the former posting a slightly faster rate of contraction. Germany Services Activity Index was at 49.2 (50.9 in March), 6-month low. Flash Germany Manufacturing PMI was at 47.9 (49.0 in March), 4-month low. Flash Germany Manufacturing Output Index at 47.9 (50.0 in March), 4-month low.
In the Asia pacific region, Tokyo market closed slight lower after moving in tight range, registering the first time in three trading days, as investors chose book profit following yen strengthened against major currencies. The benchmark Nikkei225 index was down 0.29% to finish at 13,529.65, while the Tokyo Stock Exchange dipped 0.16% at 1143.78. The dollar declined to the upper-98 yen range and weaker Chinese economic data, prompting selling especially among exporters, including carmakers and machinery makers and bellwether real estate developers. Banks also traded lower as investors sensed greater downside risk.
The Australian share market advanced, led by energy heavyweight Woodside Petroleum after the company A$520 million windfall return to shareholders, helping to overshadow weakness in metal stocks after slightly disappointing Chinese manufacturing data. The benchmark S&P/ASX200 index has advanced 49.60, or 1%, to 5,016.20.
Woodside Petroleum surged 9.7% to A$37.96 after announcing it will return cash to shareholders through a special dividend. Two weeks after shelving its controversial Browse project, WPL will return $520 million to shareholders through a special 63c per share dividend which will be paid on May 29, for shares bought before May 6. WPL has also raised its target payout ratio to 80% from 50%.
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Newcrest Mining shares declined 3.3% to A$16.45 after telling the market it will assess the scope of its mining operations following a slump in the value of the precious metal. NCM also announced it lifted its 3Q gold output by 4% while copper output fell 4.5%. The company cut 150 jobs in March, mainly from its Melbourne and Brisbane offices.
China's share market suffered massive losses today after data showed slower growth in China's manufacturing sector activity expanded at a slower rate in April. The benchmark Shanghai Composite ended down 2.6%, its worst daily loss in nearly a month. The Shenzhen Composite Index, which covers the smaller mainland exchange, dropped 25.68 points, or 2.7%, to finish at 923.42.
Shares of property- and construction-related firms took a tumble on Chinese bourses after the HSBC PMI data release, with cement producer Anhui Conch Cement Co, China's biggest cement producer, sank 5.9% to 18.10 yuan. Huaxin Cement Co skid 7.2% to 14.92 yuan. Gansu Qilianshan Cement Group Co lost 6.2% to 10.93 yuan. Real-estate major Gemdale Corp. skid 4.9%, and Chongqing Iron & Steel Co. fell 4.8%.Property giant China Vanke Co. lost 3.5% in Shenzhen trading despite posting a 16% rise in first-quarter net profit.
Chinese insurers continued its southward journey for second straight day on worried over claim spike after Sichuan earthquake. China Life Insurance, the country's biggest insurer, declined 1.8% to 16.91 yuan. Ping An Insurance Co, China's second largest insurer, dropped 4.8% to 49.92 yuan. China Pacific Insurance (Group) Co lost 4.6% to 18.81 yuan.
India's benchmark indices reversed intraday losses in late trade as gains in European stocks boosted sentiment. The barometer index, the S&P BSE Sensex, was provisionally up 10.26 points or 0.05%, up close to 140 points from the day's low and off about 30 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Index heavyweight Reliance Industries (RIL) edged higher after the company's telecom arm and Bharti Airtel signed an agreement for international data connectivity. Shares of Bharti Airtel edged lower in choppy trade. Index heavyweight and cigarette major ITC edged higher in choppy trade. Cairn India dropped after Q4 results. Capital goods pivotals edged lower. Shares of two-wheeler makers gained. HDFC Bank fell on profit booking after reporting strong Q4 results.
Elsewhere, Indonesia's Jakarta Composite lost 0.4%, Hong Kong's HSI dropped 1.1%, Singapore's Strait Times dropped 0.7%, Malaysia's KLSE Composite shed 0.4%, South Korea's Kospi Composite dipped 0.4%, and Taiwan's Taiex shed 0.4%. New Zealand's NZX50 rose 0.7%.
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