Most Asian markets began the new quarter on a weak footing Monday as a further slowdown in manufacturing activity in China, South Korea and Taiwan raised concerns about the health of those economies.
Japanese shares ended at their best level in more in more than a month as the U.S. dollar rose above ¥99 and the Bank of Japan’s quarterly tankan survey showed a sharp improvement in sentiment at large businesses.
Investor sentiment in multiple markets was hurt by business conditions facing Chinese factories in particular, with stocks traded in Australia — a key supplier of various minerals to the country — suffering steep losses.
“The [Chinese] economy is clearly continuing to restructure and is being slowly weaned off quick-fix growth measures and easy credit,” said TD Securities head of Asia-Pacific research Annette Beacher.
Australia’s S&P/ASX 200 tumbled 1.9% as the country began a new financial year.
South Korea’s Kospi lost 0.4%, and Taiwan’s Taiex shed 0.3%.
China’s Shanghai Composite ended 0.8% higher after a choppy trading session. The gains followed a hefty drop of 14% for the index in June. Hong Kong markets were closed for a holiday.
Also shedding early losses in afternoon trading, Japan’s Nikkei Stock Average rose 1.3% at 13,852.50, its highest finish since May 29.
The day’s broad losses came as two separate surveys in China showed a further loss of momentum in factory activity. The reading of the official manufacturing Purchasing Managers’ Index for June dropped to 50.1 from 50.8 in May. Another survey by HSBC showed the monthly PMI falling to 48.2 in June from 49.2 in May.
A reading below 50 shows a deterioration in activity, while one above signals an improvement.
Meanwhile, separate HSBC surveys in South Korea and Taiwan also indicated weakened conditions for local manufacturers, with both affected by the slowdown in China.
In South Korea, the June PMI dropped to 49.4, down from 51.1 in May, while in Taiwan, the June PMI came in at 49.5, up sharply from 47.1 in May but still below the 50-point threshold.
“With growth in China expected to be slower this year, which dampens demand for Korean goods, we have revised our 2013 Korea gross domestic product growth forecasts down to 2.4% from 3%,” said HSBC Korea economist Ronald Man in a statement accompanying the PMI release.
Shares of banks ended mostly higher, erasing early losses. The advance came as some analysts expected the credit crunch in the Shanghai interbank money market, which has pushed up borrowing costs sharply higher in recent weeks, to ease soon.
“We don’t expect a U-turn in policy making, and we don’t expect [a cut in benchmark interest rates], but we believe the People’s Bank of China will take decisive measures to end the interbank liquidity crunch,” said Bank of America Merrill Lynch economist Ting Lu.
Over in Shanghai, shares of Industrial & Commercial Bank of China Ltd. added 0.3%, and Agricultural Bank of China Ltd. climbed 1.2%.
Shares of some miners retreated in Sydney after the downbeat China PMI figures, while banks lost ground on economic worries as investors looked ahead to Tuesday’s monetary-policy meeting at the Reserve Bank of Australia.
Among miners, shares of BHP Billiton Ltd. dropped 1.4%, and Rio Tinto Ltd. gave up 1.2%. In the banking space, Westpac Banking Corp. gave up 3.2%, and National Australia Bank Ltd. lost 2.4%.
The advance in Tokyo came as the Bank of Japan’s quarterly tankan survey, released just ahead of the markets open Monday, showed an improvement in sentiment at both large manufacturers and non-manufacturers, with the former showing positive sentiment for the first time since mid 2011.
Several exporters advanced as the U.S. dollar had moved above the ¥99 handle since the previous session. Nissan Motor Co. climbed 1.1%, Mazda Motor Corp. added 4.9%, and Mitsui Engineering & Shipbuilding Co. gained 6.2%.
In Seoul, shares of Hyundai Motor Co. lost 1.1%, and steel maker Posco gave up 0.8% after the PMI data.
Source : Marketwatch
