Asia: China starts Lunar Year with losses despite better-than-expected manufacturing growth
Chinese stocks started the new Lunar Year on the red despite a better-than-expected manufacturing activity growth.
BHP Billiton Ltd.
$44.63
08:30 19/04/24
Fast Retailing Co.
n/a
n/a
Nikkei 225
37,068.35
09:44 19/04/24
Shanghai fell 0.55% on Wednesday due to losses in financial and technology companies and continuing worries about the Chinese economy.
Manufacturing activity expanded in February, according to a report from HSBC. The purchasing managers’ index rose to 50.1 from 49.7 in January, beating analysts’ estimates of 49.5. A reading above 50 signals growth while a level below 50 indicates a contraction.
The improvement partly reflects the impact of Chinese New Year as the holiday often results in a rush to stock up on inputs and complete existing orders before workers return home.
However, analysts believe there are still several worrying signs in the economy despite the improved data.
Julian Evans-Pritchard, China economist at Capital Economics, said: "Overall, despite today’s better-than-expected PMI reading, economic momentum remains subdued.
"However, this continued weakness may not immediately translate into slower headline growth in key metrics such as industrial production and fixed investment as these slowed sharply at the start of last year."
Barclays analysts also commented: "Deflation risks are rising given that core inflation has started to drift lower, suggesting more excess capacity and, more importantly, potential delays to private consumption and investment decisions.
"These all suggest China’s economy will be subject to both cyclical and structural challenges in the near term."
Hong Kong's Hang Seng finished slightly up by 0.11% helped by the Chinese manufacturing growth.
Galaxy Entertainment fell 4.89% after gambling revenues dropped 55% from the year before, according to analysts. Resorts developer Sands China shares also decreased 5.54%.
Japan's Nikkei 225 was down 0.1% as investors took profits after a five-day winning period.
Japanese stocks were also affected by mixed reactions following US Fed chair Yellen speech on Tuesday afternoon, who said that the central bank would still take a cautious approach to raising rates.
Japanese clothing group Fast Retailing fell 0.87% while machine tools company Sankyo was down 6% following news that it cut its profit forecast for the year.
On a more positive note, Australia's ASX rose 0.3% to 5944.9 driven by the rise in oil and metals prices.
Brent crude rose 0.4% to $58.92 per barrel in morning trade, according to the ICE.
Mining group BHP Billiton gained 1.33% after delivering a solid set of interim results with underlying earnings of $5.3bn against consensus of $4.9bn.