Asia close: Region falls on weak US and Chinese data

Date: Friday 01 Jun 2012

Nikkei-225: -1.20%
Shanghai: 0.04%
Hong Kong: -0.38%
Taiwan: -2.68%
South Korea: -0.49%
Australia: -0.30%

The main Asian equity benchmarks have started the month of June on a ‘mixed’ footing, with Chinese shares higher but the rest of the main bourses in the red.

That following the release of a weaker than forecast reading for China’s manufacturing sector purchasing managers’ index, which fell to 50.4 points in May (Consensus: 52.0) from 53.3 in the month before; which for some observers signals a deepening slump. Nonetheless, new stimulus measures in the Asian giant are expected even if not on the scale of those seen in 2008. Credit Suisse thinks the government’s stimulus response may be as much as 2tn yuan ($314bn), half the size of the package in 2008.

For their part, economists at Barclays have today written that, “we believe the government is now in full gear to stabilise growth, and while it will take some time for its policies to be reflected in the real economy, a growth pick-up during the second half of the year now appears to be a certainty. We maintain our base case call of 8.1% GDP growth and believe growth is bottoming in the current quarter.”

Also weighing on sentiment region-wide were the poor economic indicators out yesterday evening in the United States.

In other regional news, China’s home prices hit a 16 month low in May while in Japan capital spending rose by 3.5% year-on-year (Consensus: -0.1%) in the first three months of the year, after a gain of 4.9% in the last quarter of 2011.

Sony, which receives a large part of its sales from China and the US, was one of the worst performers in Tokyo, while Aluminum Corp of China fell 4.8% in Shanghai trading after JPMorgan downgraded the stock to "underweight" from "hold."

AB

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