Inside Financial Markets

Asian Stocks Drop After China Manufacturing Gauges Slide

asian markets fallAsian Stocks Drop After China Manufacturing Gauges Slide

Asian stocks dropped, with a regional index of equities retreating from a three-week high, after gauges of manufacturing in China declined, underscoring challenges for President Xi Jinping as he tries to sustain economic momentum while rolling out reforms.

Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, fell 1.2 percent in Hong Kong. Hyundai Motor Co. and Kia Motors Corp. fell at least 4.7 percent after South Korea’s largest automakers forecast their weakest sales growth in eight years. BHP Billiton Ltd., Rio Tinto Group and Fortescue Metals Group Ltd., Australia’s biggest iron-ore exporters, gained at least 0.6 percent as shipments from the world’s No. 1 exporter of the commodity resumed after a cyclone.

The MSCI Asia Pacific excluding Japan Index slipped 0.5 percent to 466.04 as of 11:41 a.m. in Hong Kong, erasing gains of as much as 0.2 percent. Japanese markets are closed for a holiday. Global equities soared by more than $9 trillion in 2013 as central bank stimulus helped the U.S. economy gain momentum and Europe recover from its longest recession.

“We’re seeing some profit-taking today following the recent rally,” Teresa Chow, a Hong Kong-based fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion, said by phone. “China’s reforms may bring short-term pain for the economy, but over the longer term we see a more positive story.”

China Manufacturing

China’s manufacturing purchasing managers’ index came in at 51 for December, the National Bureau of Statistics and the nation’s logistics federation said yesterday. That trailed the median economist forecast of 51.2 and was a decline from November’s 51.4 reading.

A separate manufacturing PMI report from HSBC Holdings Plc and Markit Economics today showed the gauge coming in at 50.5, from 50.8 in November, in line with the median of 17 estimates compiled by Bloomberg. Levels above 50 signal expansion.

“There’s a good long-term story for China with better quality economic growth, but the pains of the reform program are probably going to hold the markets back for the moment,” Gary Dugan, who helps oversee about $53.4 billion as the Singapore-based chief investment officer for Asia and the Middle East at Coutts & Co., the wealth management unit of Royal Bank of Scotland Group Plc, told Bloomberg TV. “People are looking for buying opportunities, but they do need a good story.”

China’s Shanghai Composite Index and Hong Kong’s Hang Seng Index both fell 0.4 percent. South Korea’s Kospi Index dropped 1.5 percent. Taiwan’s Taiex Index decreased 0.1 percent. Australia’s S&P/ASX 200 Index added 0.3 percent and Singapore’s Straits Times Index increased 0.2 percent. New Zealand’s market is closed for a holiday.

Thai Unrest

Thailand’s SET Index dropped 1.4 percent, heading for its lowest close since Aug. 28, amid growing political unrest in Southeast Asia’s second-largest economy. The nation’s Election Commission plans to meet members of the biggest political parties today to discuss ways to ease tension before a Feb. 2 vote that’s being threatened by growing anti-government protests.

The Asia-Pacific excluding Japan measure traded at a price-to-earnings ratio of 13.4 times as of Dec. 31, data compiled by Bloomberg show. That compares with an earnings multiple of 18 on the MSCI All-Country World Index, which advanced 20 percent in 2013.

The Standard & Poor’s 500 Index climbed 0.4 percent on Dec. 31 in New York, ending the year at an all-time high. The Dow Jones Industrial Average gained 0.4 percent to a record.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)