HONG KONG (MarketWatch) — Most Asian markets rebounded from a weak start Monday as a sharp deterioration in Chinese manufacturing conditions fueled hopes that Beijing will act to support the economy, although a strengthened yen hurt Japanese shares.
“The Chinese government is definitely not going to sit aside,” said Peter Lai, a director at DBS Vickers in Hong Kong.
“I do believe that stability is of utmost importance to the Chinese government, and measures will be implemented after the 18th [Communist Party] Congress, supposed to be held in September or the fourth quarter this year,” Lai said.
/zigman2/quotes/206600939/delayed 000001 15.58, -0.01, -0.06%
Both markets had declined in the previous three trading days, and both opened lower on Monday after government data released by the China Federation of Logistics & Purchasing (CFLP) over the weekend showed the country’s manufacturing activity deteriorated in August.
A privately-compiled survey by HSBC released Monday also showed separately that business conditions for Chinese manufacturers weakened sharply in August from the preceding month. But the weak figures strengthened expectations for policy stimulus from the world’s second-largest economy. Read full story on China manufacturing data.
Also supporting sentiment, data released Monday by the CFLP showed China’s Purchasing Managers’ Index for the non-manufacturing sector improved to 56.3 in August, 0.7 percentage points higher than in the previous month.
DBS Vickers’ Lai said the non-manufacturing PMI was “very encouraging” and shows Beijing “knows how to control demand-supply in a flexible and targeted way.”
Also overcoming early losses in the wake of the Chinese data, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% gained 0.4%, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.33% added 0.3% and Taiwan’s Taiex climbed 0.7%.
But Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.39% finished 0.6% lower, unable to latch on to gains recorded earlier in the day.
The day’s gains followed an upbeat finish on Wall Street Friday, on expectation that the Federal Reserve was leaning towards further asset purchases. Some analysts pointed to U.S. nonfarm payrolls data due this Friday as a crucial data point that will shape the central bank’s intent to provide further monetary stimulus.
“We believe that the incoming data have taken a more positive tone and, barring a very weak reading in the August payroll report, should lead the Fed to refrain from initiating [the third round of quantitative easing] at its September meeting,” Barclays economist Michael Gapen wrote in a report.
Chinese property developers were among the strong gainers Monday on hopes for stimulus. In Hong Kong, shares of China Overseas Land & Investment Ltd. /zigman2/quotes/202573805/delayed CAOVY -0.92% /zigman2/quotes/205731176/delayed HK:688 -2.34% jumped 3.7% and China Resources Land Ltd. /zigman2/quotes/209191868/delayed CRBJY +7.06% /zigman2/quotes/202417326/delayed HK:1109 -1.26% soared 4.8%.
In Shanghai, property developers were leading the advance, with Poly Real Estate Group Co. /zigman2/quotes/201864015/delayed CN:600048 -1.98% rallying 6.5% and Gemdale Corp. /zigman2/quotes/208026094/delayed CN:600383 -2.07% 4.2% higher.
In Tokyo, exporters were weak on a firmer yen, although many pared losses. Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -0.57% /zigman2/quotes/208567357/composite SNE -1.20% fell 0.6% and Panasonic Corp. /zigman2/quotes/201785256/delayed JP:6752 +0.50% dropped 2.6%.
Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 -0.54% /zigman2/quotes/207472799/delayed SHCAF +3.24% tumbled 6.1% after Standard & Poor’s on Friday cut the company’s credit rating to speculative or “junk” grade, citing weak liquidity.
Meanwhile, a Nikkei news report cited the Japanese conglomerate’s president as saying a final deal for an investment from Taiwan’s Hon Hai Precision Industry Co. /zigman2/quotes/207256514/delayed TW:2317 -1.33% /zigman2/quotes/205520950/delayed HNHPF -1.80% has been delayed due to questions about an overall Sharp-Hon Hai business alliance, rather than issues surrounding the prices. Read more on Sharp president’s comments.
Hong Kong students end hunger strike
Three Hong Kong students end their hunger strike over curriculum changes after 56 hours due to health concerns. Courtesy Reuters. Photo: Reuters.
Shares of Hon Hai rallied 6.1% in Taipei, while listed subsidiary Foxconn International Holdings Ltd. /zigman2/quotes/205017351/delayed HK:2038 0.00% /zigman2/quotes/207122890/delayed FXCNF -1.16% added 4.5% in Hong Kong, after Hon Hai posted a 0.5% gain in first-half net profit from a year earlier despite booking a large loss on its investment in Sharp.
Shares of Japanese retail major Seven & I Holdings Co. /zigman2/quotes/207666111/delayed JP:3382 +0.43% /zigman2/quotes/203868267/delayed SVNDF -10.65% added 1.8% after a Nikkei report saying the company planned to ramp up its shopping-mall openings. Read more on Seven & I’s reported plans for more mall openings.
Among Japanese financials, Nomura Holdings Inc. /zigman2/quotes/206251373/delayed JP:8604 -0.46% /zigman2/quotes/201003564/delayed NRSCF +2.16% /zigman2/quotes/207276383/composite NMR -1.38% climbed 2.3% after a Nomura executive said Friday the broker would seek to cut $1 billion in costs by March 2014. Read more on Nomura cost-cutting announcement.
In Seoul, shares of Samsung Electronics Co. /zigman2/quotes/209800866/delayed KR:005930 -1.33% /zigman2/quotes/202367843/delayed SSNLF 0.00% fell 1.2% after Apple Inc. /zigman2/quotes/202934861/composite AAPL -2.26% added the Galaxy S III, the Korean firm’s flagship smartphone, to a U.S. patent dispute, according to a Wall Street Journal report Friday.
A surge Friday in gold futures sent Australia’s Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM +1.45% /zigman2/quotes/206026738/delayed NCMGF +3.70% rising 1.5%, while Hong Kong-listed shares of Zijin Mining Group Co. /zigman2/quotes/204517000/delayed HK:2899 +1.31% /zigman2/quotes/209836076/delayed ZIJMF +4.95% soared 3.7%.