Negative Chinese manufacturing data was the catalyst for heavy selling across the regional market as it re-confirms expectations of the slowdown in the Chinese economy. The report came after data released early this week showed China's economy slowed in the final quarter of 2013.
Investor sentiments rattled after the results of HSBC's preliminary survey of factory purchasing managers in January, indicated that China's manufacturing, a mainstay of the world's second largest economy, likely to shrink for the first time in half a year.
The HSBC-Markit Flash Purchasing Managers' Index fell to 49.6 in January, down from 50.5 in December, below market expectations for a smaller fall to 50.3, according to Markit. The reading hit a six-month low. A figure under 50 indicates contraction. Meanwhile, the Flash China Manufacturing Output Index also fell slightly to 51.3 in January from 51.4 in December. The reading also hit a three-month low. The Flash (PMI) is published on a monthly basis ahead of final PMI data, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China.
HSBC chief economist for China noted that the "marginal contraction" was "mainly dragged by cooling domestic demand conditions". And, that "implies softening growth momentum for manufacturing sectors". HSBC urged China to tilt policy towards support growth to "avoid repeating growth deceleration seen in 1H 2013". The final HSBC manufacturing PMI will be released on January 30, to be followed by the official manufacturing PMI on February 1.
Among Asian bourses, Japan's share market declined, as investors pocketing recent gains after a report indicated that China's manufacturing, a mainstay of the world's second largest economy, was likely to shrink for the first time in half a year. The benchmark Nikkei-225 index dropped 125.07 points to 15695.89, while the Topix index of all first-section shares sank 12.11 points to 1287.52.
Among Tokyo blue chips, Topix Machinery Index erased gains to drop 0.8% after the Chinese data. Mobile-phone company SoftBank Corp. sank 3.5% to close at a seven-week low. NEC jumped the most on the Nikkei 225 Stock Average after Citigroup Inc. raised its rating on the computer maker. Nidec increased 5.6% after the precision-motor manufacturer boosted its full-year profit forecast and announced a share buyback.
Japanese yen was little stronger from prior day closure against US dollar and other major peers on Thursday after a private report showed China's Purchasing Managers Index dropped to 49.6 for January and International Monetary Fund Deputy Managing Director Naoyuki Shinohara said Japan doesn't need more monetary easing. Around late afternoon, the US dollar traded at Y104.36, the euro stood at Y141.40, British pound at Y171.86, Swiss franc at Y114.55, Canadian dollar at Y93.85 and Australian dollar at Y91.92.
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In Australia, Australian stock market slipped for the third time this week, with materials and resources blue chips lead retreat after report signalled a slowdown in Chinese factory activity. The benchmark S&P/ASX 200 index declined 56.80 points to 5263.00. The broader All Ordinaries dropped 55.80 points to 5275.50.
Shares of Australian metal & mining companies suffered heavy losses today, after a new report signalled a slowdown in Chinese factory activity. Fortescue Metals was down 2.1% to A$5.24. Rio Tinto fell 1% to A$64.67 and BHP Billiton dropped 1.6% to A$37.04. Resolute Mining was down 8.3% at A$0.555.
Whitehaven Coal lost 1.9% to A$1.85 after reporting record quarterly production and sales due to better than expected output at its main Narrabri project. In the December quarter production rose 44% while sales climbed 52%.
Shares of precious metal miners were lower on weaker bullion prices. Comex gold futures lost US$3.20 or 0.3% to US$1,238.60 per ounce. Perseus Mining sank 5.1% to A$0.375 and Kingsgate Consolidated shed 3% to A$1.12. Australia's biggest goldminer, Newcrest Mining, dived 2.3% to A$9.13 despite showing it increased production in the December quarter while cutting costs to A$921 per ounce.
Australia's oil producers were weak, with oil and gas producer Santos down 0.8% to A$14.14 after showing that despite a fall in production December quarter sales revenue climbed 4% to a record A$1.065 billion. Woodside Petroleum fell 0.3% to A$38.02, Origin Energy 2.5% to A$13.90 and Oil Search 1.2% to A$8.11.
Australian dollar declined from yesterday closure against greenback and other major currencies on Thursday after an early indicator of activity in China's factories during January showed the manufacturing sector contracting for the first time in six months, suggesting a faster than expected decline in demand growth for Australia's major exports. Around late afternoon, the Australian dollar was quoted at 0.8808 against US dollar, 0.6501 against the euro, 91.92 against the Japanese yen, 0.5317 against the British pound, 0.8026 against Swiss franc, 0.9794 against Canadian dollar, and 6.8327 against the HK dollar.
In China, disappointing monthly reading on the health of manufacturing sector pushed the China stock market lower. The Shanghai benchmark provisionally ended 9.57 points lower at 2042.18, while CSI 300 Index declined 11.91 points to 2231.89.
Shares of Chinese materials and resources and energy companies suffered heavy losses today, after a new report signaled a slowdown in Chinese factory activity. Jiangxi Copper slid 1.1% to 13.40 yuan. Baoshan Iron & Steel Co. dropped 1.6% to 3.76 yuan. PetroChina declined 0.9% to 7.62 yuan.
Inner Mongolia Yili surged 4.6% to 39.23 yuan after reporting an 80% jump in 2013 net income. The company had net income of 1.72 billion yuan in 2012.
Hebei Huijin Electromechanical surged 45% to 27.26 yuan. All eight IPO stocks trading today in Shenzhen were halted twice after reaching the 44% limit.
Ministry of Finance said in a statement on Wednesday that profit of China's state-owned enterprises grew 5.9% last year, compared with a rise of 8.2% in the January-November period and 10.1% in the first 10 months of 2013. The growth pace, however, marked a significant change in fortunes compared with a decline of 5.8% in 2012. State-owned non-financial companies made a combined profit of 2.41 trillion yuan (US$398 billion) last year. The total business revenues of SOEs climbed 10.1% year on year to 46.47 trillion yuan last year, the ministry said.
Conference Board said its Leading Economic Index for China rose 0.4% in December to 278.8 following +1.3% in November and +0.8% in October. Two of the six of the index's components contributed positively in December.
In Hong Kong, shares in city market closed sharply lower on weaker manufacturing indicator that point to slowing Chinese economy. The benchmark Hang Seng Index provisionally finished 348.35 points lower at 22733.90.
Chinese banks listed in Hong Kong were lower. China Construction Bank, the nation's second-largest lender by market value, dropped3% to HK$5.45. Agricultural Bank of China Ltd. fell 2.5% to HK$3.40.
Industrial & Commercial Bank of China slipped 3.4% to HK$4.81 as investors in a troubled trust product distributed by the lender protested outside its private-banking branch in Shanghai, demanding their money amid concerns of a default.
Shares of property developers were lower. Hang Lung Properties sank 5.1% to HK$23.10 after the developers announced its profit excluding revaluation gains and deferred taxes fell 18% to HK$5.05 billion from a year earlier as the company sold fewer investment properties. Henderson Land (00012), Cheung Kong (00001) and SHKP (00016) dipped 1.9%, 1.6% and 1.4% to HK$44.2, HK$118.3 and HK$97.55.
Shares of utility players advanced. Power Asses (00006), Want Want (00151) and CR Power (00836) registered gains, with Power Assets being the top performer, rising 2.4$ to HK$62.8.
Macau gaming players extended yesterday's plunge. Galaxy Ent (00027) retreated 2% to HK$75.4. Sands China (01928) fell 2.9% to HK$60.05. Both stocks slid 5.5% and 5.4% respectively at one stage.
In India, key benchmark indices extended gains and hit fresh intraday high in mid-afternoon trade as European stocks reversed initial losses. At 14:20 IST, the S&P BSE Sensex was up 49.32 points or 0.23% to 21,386.99.
A bout of volatility was witnessed as key benchmark indices recovered to green after a weak start triggered by weak Asian stocks. Most IT stocks edged lower on profit booking after recent gains. Tata Consultancy Services (TCS) shed 0.97%. HCL Technologies fell 2.91%.
Wipro dropped 0.16%. Tech Mahindra fell 0.85%. The company said during market hours that media reports saying that the company is close to buying a BFSI company are speculative in nature and not issued by the company.
Infosys extended its recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014 at the time of announcement of Q3 December 2013 earnings on 10 January 2014. Infosys was up 0.4% at Rs 3,782. The stock hit a record high of Rs 3,788.80 in intraday trade.
Amara Raja Batteries rose in volatile trade after reporting good Q3 results. Amara Raja Batteries rose 3.15% after net profit rose 17.43% to Rs 95.01 crore on 13.69% increase in net sales to Rs 859.95 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 23 January 2014.
Elsewhere in the Asia Pacific region, New Zealand's NZX50 index decreased 0.8%. South Korea's KOSPI shed 1.16%. Indonesia's Jakarta Composite index added 0.41%. Taiwan's Taiex index sank 0.35%. Malaysia's KLSE Composite shed 0.32%. Singapore's Straits Times index dropped 1.07%.
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