Asia report: Stocks mixed as China factory activity contracts

Stock markets were mixed in Asia on Monday, with Japan’s bourse in the green, while manufacturing activity in mainland China contracted according to the latest data.

In Japan, the Nikkei 225 was up 1.78% at 27,587.46, as the yen weakened 0.64% against the dollar to last trade at JPY 148.54.

Automation specialist Fanuc was up 1.03%, fashion firm Fast Retailing added 0.9%, and technology conglomerate SoftBank Group jumped 6.21%.

The broader Topix index was ahead 1.6% by the end of trading in Tokyo, settling at 1,929.43.

Industrial production in Japan dropped in September for the first time in four months, with government data showing a fall of 1.6% on the month.

That was more than the 1% weakening analysts polled by Reuters had been expecting, with the data release putting the fall down to chemicals, motor vehicles and production machinery.

On the mainland, the Shanghai Composite was down 0.77% at 2,893.48, and the technology-heavy Shenzhen Component slipped 0.05% to 10,397.04.

Factory activity in China narrowed in October, according to fresh official data released on Monday, with the manufacturing purchasing managers’ index (PMI) coming in at 49.2.

That was below the 50 reading pencilled in by analysts, and was down from 50.1 in September, signalling a swing to contraction given the 50-point level separates expansion from a shrinking.

The country’s official non-manufacturing PMI also swung to contraction, coming in at 48.7 in October, compared to 50.6 in September.

Duncan Wrigley at Pantheon Macroeconomics said the impact of more stringent Covid restrictions during the 20th Party Congress period outweighed the lift from infrastructure stimulus.

“The official manufacturing PMI saw slippage in output, new orders, and order backlog.

“The fall in current output, to 49.6 from 51.5, can be put down to temporary factors.

“But the drop in new orders, to 48.1 from 49.8, indicates sustained weakness and that the stimulus has not yet filtered down to manufacturing sectors.”

Wrigley said the “significant drop” in the non-manufacturing PMI was driven by both components, services and construction.

“More lockdowns in the run-up to the Congress have dragged on in-person consumption sectors, including retail, road transport, air transport, accommodation, catering, leasing and business services.”

South Korea’s Kospi added 1.11% to 2,293.61, while the Hang Seng Index in Hong Kong lost 1.18% to 14,687.02.

Casino stocks were among the top risers in the special administrative region, with Galaxy Entertainment up 1.85%, Sands China rising 4.42%, and Wynn Macau 2.62% firmer.

The moves came after China announced a new e-visa system for mainland residents wanting to visit the gambling hub of Macau, replacing the current, cumbersome in-person application process.

Seoul’s blue-chip technology stocks were mixed, with Samsung Electronics up 3.66%, while SK Hynix lost 0.84%.

Oil prices were lower at the end of the Asian day, with Brent crude futures last down 1.25% on ICE at $94.57 per barrel, and the NYMEX quote for West Texas Intermediate off 1.54% at $86.55.

In Australia, the S&P/ASX 200 rose 1.15% to 6,863.50, with retailers in the green, as Coles Group rose 0.37%, Myer Holdings jumped 5.83%, Wesfarmers ahead 3.22%, and Woolworths Group 0.73% stronger.

That was on the back of fresh official data showing retail sales rising 0.6% month-on-month in September, unchanged from the prior month and in line with Reuters-polled expectations.

Australia’s retail volumes are set to be released on Friday, with quarterly growth of around 0.4% anticipated, according to ANZ Research.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 jumped 1.88% to 11,338.43, with payment technology company Pushpay rising 5% after it returned to trading after a takeover offer worth NZD 1.53bn emerged.

The offer - for 134 NZ cents per share, a premium on the closing price of 125 cents - came from shareholders BGH Capital and Sixth Street, which together already own 20.3% of Pushpay, although some local commentators called the price a disappointment.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.18% at AUD 1.5626, and the Kiwi retreating 0.03% to NZD 1.7224.

Reporting by Josh White for Sharecast.com.