HONG KONG (MarketWatch) — Mainland Chinese stocks stumbled to their lowest level since February 2009 to lead Asian markets lower Thursday after data showed a further deterioration in manufacturing activity in the country.
Resource companies with exposure to China were hurt, in particular, while regional energy stocks were also hit as Nymex crude-oil prices sank further after tumbling overnight in New York.
The Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -0.06% skidded 2.1% to 2,024.84 after an initial reading of HSBC’s September survey on manufacturing conditions came in at 47.8. The figure, although up from a final reading of 47.6 in August, was well below the 50-mark that separates expansion from contraction, and represented a deterioration for the 11th straight month. Read more on China PMI.
Chinese protest Japanese consulate
Protesters demonstrate in front of the Japanese Consulate in Shanghai, though access to the street in front of the consulate is strictly controlled by police and paramilitary units.
The Shenzhen Composite Index slumped 3% to 840.21, while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.09% slid 1.2% to 20,590.92.
“We’re under some selling pressure after the PMI... It won’t help to change market worries about the slowing Chinese economy,” said KGI Asia Chief Operating Officer Ben Kwong.
HSBC’s Chief Economist for China, Hongbin Qu, said although manufacturing activity was “lackluster,” easing measures by Beijing in the recent past should help lead a modest improvement from the fourth-quarter.
The PMI data also hurt sentiment elsewhere in the region. Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.39% fell 1.6% amid renewed yen strength, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% lost 0.9%, Australia’s S&P/ASX 200 Index /zigman2/quotes/210598100/delayed AU:XJO -0.33% gave up 0.5% and Taiwan’s Taiex shed 0.7%.
The performance followed broad gains Wednesday, when stocks in Tokyo rallied after the Bank of Japan said that it would undertake more asset buying to support its economy, joining recent easing moves in the U.S. and Europe. The Japanese markets retreated Thursday their gains after the yen firmed up in U.S. trading overnight.
“Most of the [Asian] indexes have already reached relatively high levels that reflect expectations of this kind of easing,” said Kwong. “I think that investors now have to watch economic numbers to see whether there is any sign of genuine improvement.”
Resource stocks were among the worst performers. Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO -0.46% /zigman2/quotes/202627887/composite RIO +0.79% shrank 2.1%, BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.78% /zigman2/quotes/208108397/composite BHP -0.45% fell 1.5% and iron-ore extractor Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG -1.23% /zigman2/quotes/204116626/delayed FSUMF -0.14% gave up 2.4% in Sydney.
In Shanghai, with Jiangxi Copper Co. /zigman2/quotes/201334192/delayed CN:600362 +0.13% sank 3.8% and Aluminium Corp. of China Ltd., or Chalco, /zigman2/quotes/208051344/composite ACH +1.23% /zigman2/quotes/210453246/delayed CN:601600 0.00% dropped 2.8%. In Hong Kong, Jiangxi /zigman2/quotes/201668148/delayed HK:358 -1.24% /zigman2/quotes/204256025/delayed JIXAY -2.94% lost 3.1% and Chalco /zigman2/quotes/202960704/delayed HK:2600 +0.44% fell 0.9%.
Energy firms dropped across the region after benchmark crude-oil futures hit a six-week low in New York trading. Read more on Wednesday's crude-oil session.
With oil futures hovering around $91 a barrel in Asian electronic trading, Inpex Holdings Inc. /zigman2/quotes/206689846/delayed JP:1605 -0.23% /zigman2/quotes/207958170/delayed IPXHY -0.66% lost 3.5% in Tokyo, while Linc Energy Ltd. dropped 6.4% and Woodside Petroleum Ltd. /zigman2/quotes/203437212/delayed AU:WPL -0.15% /zigman2/quotes/206770672/delayed WOPEF +3.37% dropped 2.2% in Sydney.
Cnooc Ltd. /zigman2/quotes/203421416/delayed HK:883 -0.33% /zigman2/quotes/204964401/composite CEO -1.55% lost 3.5% in Hong Kong, while PetroChina Ltd. /zigman2/quotes/204979431/delayed HK:857 -1.17% /zigman2/quotes/205108732/composite PTR -0.98% /zigman2/quotes/206980083/delayed CN:601857 -0.19% lost 1.8% in Hong Kong and 1.7% in Shanghai.
Japanese exporters gave up gains from the previous session, with Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -0.57% /zigman2/quotes/208567357/composite SNE -1.20% down 4.6% and Nissan Motor Co. /zigman2/quotes/208298710/delayed JP:7201 -0.06% /zigman2/quotes/207656007/delayed NSANY -0.50% losing 3.4%, while Olympus Corp. /zigman2/quotes/200860615/delayed JP:7733 -1.61% /zigman2/quotes/203009041/delayed OCPNF +18.09% retreated 2.3%.
Data released earlier in the day showed Japan’s August trade deficit widened to ¥754.1 billion ($9.62 billion) from ¥517.4 billion in July, although it came in below expectations for a ¥797.9 billion deficit. Read more on Japan’s August trade data.
Among gainers Thursday, reported plans by Nippon Telegraph & Telephone Corp. /zigman2/quotes/200718273/delayed JP:9432 +1.28% to buy back up to $1.9 billion of its shares boosted the stock 7.1%. Read more on NTT’s share buyback.