By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Most Asian markets fell Tuesday after data showing Chinese manufacturing activity expanded at a slower rate in April, with Shanghai-listed stocks hit particularly hard, although Australian shares climbed on the back of banks and energy producers.
“Investor outlook on the Chinese economy appears delicately balanced,” said CMC Markets chief market analyst Ric Spooner.
Spooner said there were worries that the Chinese economy may be underperforming the official numbers, in addition to “concerns that the economy has the potential to weaken further as authorities wrestle with the contradictory imperatives of maintaining growth.”
The Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -4.31% was the region’s worst performing stock benchmark, dropping 2.6% for its worst daily loss in nearly a month. The decline came after a preliminary version of HSBC’s manufacturing Purchasing Managers’ Index slipped to a two-month low of 50.5 in April, compared with a final reading of 51.6 in March.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.84% gave up 1.1%, Taiwan’s Taiex shed 0.4% and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.81% lost 0.4%.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -1.06% slipped 0.3% after struggling to rise earlier in the day.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.61% was one major exception, rising 1% at 5,016.20, even though a number of Sydney-listed miners that count China as a major customer for the commodities they produce declined.
The broad losses in Asia came despite gains for U.S. stocks overnight.
HSBC’s chief China economist Qu Hongbin said a drop in new export orders signaled weak external demand, while overall sluggish demand conditions have also begun to weigh on employment. Still, Qu remained optimistic about a policy response to support the economy.
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As China’s middle class grows, so does their debt. Shaun Rein from China Market Research talks about what Chinese consumers are buying with the 320 million credit cards currently in circulation in China.
“Beijing is expected to respond strongly to sustain the economic recovery by increasing efforts to boost domestic investment and consumption in the coming months,” he said.
Shares of property- and construction-related firms took a tumble on Chinese bourses after the HSBC PMI data release, with Anhui Conch Cement Co. /zigman2/quotes/204422624/delayed CN:600585 -3.48% /zigman2/quotes/200654749/composite AHCHY +0.45% shedding 5.9%, real-estate major Gemdale Corp. /zigman2/quotes/208026094/delayed CN:600383 -4.27% skidding 4.9%, and Chongqing Iron & Steel Co. /zigman2/quotes/202296970/delayed CN:601005 -4.71% falling 4.8%.
Property giant China Vanke Co. lost 3.5% in Shenzhen trading despite posting a 16% rise in first-quarter net profit.
Commodity producers suffered selling in Hong Kong, where shares of Aluminum Corp. of China Ltd. /zigman2/quotes/202960704/delayed HK:2600 -3.50% /zigman2/quotes/208051344/composite ACH -2.53% lost 1.7% and PetroChina Co. /zigman2/quotes/204979431/delayed HK:857 -3.83% /zigman2/quotes/205108732/composite PTR -1.64% fell 1.2%, while ports operator Cosco Pacific Ltd. /zigman2/quotes/201167312/delayed HK:1199 -3.44% /zigman2/quotes/204918291/composite CSPKY +0.54% dropped 3%.
Heavyweight stock China Mobile Ltd. /zigman2/quotes/200868736/delayed HK:941 -2.66% /zigman2/quotes/204514293/composite CHL -1.30% retreated 0.9% after reporting its net profit barely grew in the first quarter amid stiff competition.
The gains in Sydney were aided by the energy sector, with major oil producer Woodside Petroleum Ltd. /zigman2/quotes/203437212/delayed AU:WPL -2.36% /zigman2/quotes/206334215/composite WOPEY +1.08% jumping 9.7% after announcing a special dividend. Among its sector peers, shares of Santos Ltd. /zigman2/quotes/207349564/delayed AU:STO -1.89% /zigman2/quotes/207933640/composite STOSF +0.57% climbed 3%, while Linc Energy Ltd. added 5.1%.
Financials were also higher in Sydney following a positive lead from Wall Street, helped by further buying in high-dividend stocks. Australia & New Zealand Banking Group /zigman2/quotes/205482049/delayed AU:ANZ -1.03% /zigman2/quotes/203732563/composite ANZBY +0.39% added 2.4%, and Westpac Banking Corp. /zigman2/quotes/203084975/delayed AU:WBC -1.40% /zigman2/quotes/206661702/composite WBK +1.30% gained 1.3%.
The big miners dropped, however, in reaction to the Chinese data. Shares of BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.74% /zigman2/quotes/208108397/composite BHP +1.13% lost 1.1%, Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO -0.69% /zigman2/quotes/202627887/composite RIO +1.62% fell 2.3% and Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG -0.13% /zigman2/quotes/204116626/composite FSUMF +0.49% dropped 1.3%.
Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM -1.40% /zigman2/quotes/203286036/composite NCMGY -0.07% declined 3.3% after saying it’s reviewing all business activities in the wake of the drop in gold prices.
Shares of Virgin Australia Holdings Ltd. /zigman2/quotes/207744791/delayed AU:VAH +6.17% /zigman2/quotes/207088423/composite VBHLF +499,900% climbed 4.6% after local regulators approved the airline’s plan to buy a majority stake in low-cost carrier Tiger Airways Australia.
Over in Tokyo, banks gave up some of their strong recent gains, with Mitsubishi UFJ Financial Group Inc. /zigman2/quotes/207520099/delayed JP:8306 -1.68% losing 1.5% and Mizuho Financial Group Inc. /zigman2/quotes/204507985/delayed JP:8411 -2.11% /zigman2/quotes/200950467/composite MFG +0.41% shedding 1.8%.
Fuji Heavy Industries Ltd. /zigman2/quotes/203522406/delayed JP:7270 -2.54% /zigman2/quotes/203008939/composite FUJHF -3.94% , the maker of Subaru vehicles, rose 0.5% after the Nikkei newspaper said it plans to invest 30 billion yen ($302.1 million) /zigman2/quotes/210561789/realtime/sampled USDJPY -0.2668% for expansion in the U.S.
ANA Holdings Inc. /zigman2/quotes/202790240/delayed JP:9202 -1.65% /zigman2/quotes/203486823/composite ALNPF 0.00% added 1% after the Nikkei newspaper reported that the parent company of All Nippon Airways Co. was likely to report a 10% increase in annual group operating profit.