HONG KONG (MarketWatch) — Asia’s major stock markets finished on a mixed note Monday, as upbeat Chinese manufacturing data weren’t enough to dispel concerns that the mainland’s recent economic recovery could fade out next year.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.13% climbed 0.1%, Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO +0.04% advanced 0.6%, and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.93% rose 0.4%.
Taiwan’s Taiex added 0.3%, while Singapore’s Straits Times Index /zigman2/quotes/210597985/delayed SG:STI +0.17% retreated 0.1% late.
The Asia Dow was 0.1% lower.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.15% tumbled 1.2% after rising 0.6% in early moves to near its highest level for the year.
The Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -3.42% ended down 1%, while the Shenzhen Composite Index finished down 2.5%.
Stimulus in China
Capital Economics said China’s rebound would likely begin to fade out next year if the government doesn’t roll out new programs to keep channeling money into the economy.
“In these circumstances the current pickup in China’s growth will only continue if the government introduces further stimulus,” Capital Economics strategists said in a recent note.
Meanwhile, a pair of closely watched business surveys gave Asia investors some reason for optimism, as both data sets showed Chinese manufacturing grew last month.
The government-sponsored version of the November manufacturing Purchasing Managers’ Index rose to 50.6, up 0.4 point from October.
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The result was just below economists’ expectations but was above the 50-mark separating growth from contraction. Read: Chinese manufacturing grows in November
Meanwhile, the final version of HSBC’s privately compiled version of the China manufacturing PMI index, released Monday, also showed improvement. The figure rose to 50.5 from 49.5 in October, its first move above 50 in more than a year.
HSBC chief China economist Hongbin Qu said the data confirmed that the Chinese economy “continues to recover gradually. We expect [gross domestic product] growth to rebound modestly to around 8% in the fourth quarter as the easing measures continue to filter through.”
Ben Kwong, chief operating officer at KGI Asia, said that Chinese share- market performance currently isn’t taking its cues from the economic outlook but is reflecting structural problems, including weak investor confidence. Read Craig Stephen’s column the headwinds facing China’s stock markets.
“That’s why, despite the economic outlook being quite upbeat, the A-shares market is pretty weak. It’s dragging down Hong Kong as well,” he said.
Still, other analysts viewed the stock market as correctly pricing in deteriorating conditions next year.
Barclays analysts warned against dismissing the weakness in Shanghai stocks, saying it “reflects rational investor behavior given the outlook for corporate profits and policy easing.”