Friday, January 24, 2014

Asia Falls as China Factory Data Slips

Asia equities fell after a weak manufacturing report from China. The preliminary HSBC/Markit manufacturing PMI for January fell into contractionary territory for the first time in six months. The advance reading was 49.6 compared to a final 50.5 a month earlier. A figure below 50 indicates contraction.
This reading suggests China’s manufacturing sector hasn’t yet emerged from its rough patch.

China equities were also hurt over concerns of a possible default in a trust product marketed by the Industrial & Commercial Bank of China (ICBC). The CNY3 billion product, called “Credit Equal Gold No. 1”, helped raise funds for a Shanxi coal miner, and was purportedly marketed as 100% safe, according to Bloomberg News. Three parties, including ICBC, may help bail out the fund in the event of a default, Bloomberg said, citing a local news report. The news sent China Construction Bank (-2.7%), Agriculture Bank of China (-2.9%), ICBC (-3%), among others, tumbling. The SHCOMP fell 0.5%. Hong Kong’s Hang Seng slipped 1.5%. The HSCEI, which tracks China stocks listed in Hong Kong, slid 2.1%.

Elsewhere in North Asia, Taiwan industrial production rose 5.07% on-year, beating median forecasts for 1.9% by a Bloomberg survey of 18 economists. South Korea grew 0.9% in 4Q-13, as exports contributed more than domestic demand. The Bank of Korea expects the economy to post 3.8% growth this year.  The Taiex was down 0.4%, while the Kospi fell 1.2%.

In Southeast Asia, Indonesia’s JCI ended 0.4% higher as plantation stocks rose as a weakening ringgit could boost Malaysia palm oil exports – and thus, palm oil prices. Singapore’s STI slid 1.1%. Consumer prices eased to 1.5% on-year in December as private transportation costs fell, according to a joint statement by the central bank and trade ministry. Inflation was 2.4% for 2013, “sharply lower” than the 4.6% recorded in 2012.

India’s Sensex stayed near record levels, losses in oil companies and automakers offset by the rally in Larsen & Toubro after its profit announcement beat analyst expectations.