Asia: China declines on disappointing manufacturing data, rest of Asian stocks up

Chinese stocks fell on Wednesday, but the rest of Asia remained high following mixed data.

The Shanghai composite index was down 5.22% following weak data.

The official manufacturing purchase manager's index (PMI) was unchanged from May at 50.2, slightly below expectations of 53.2.

Meanwhile, HSBC's PMI, which focuses more on small to medium-sized firms, rose to 49.4 from 49.2, against expectations of an increase to 49.6 points.

However, the data brought hopes of more economic stimulus rather than heightening fears of slowdown.

"With the People’s Bank of China having cut rates again this weekend, there is clearly an effort being made to support the economy – even if the latest was probably largely aimed at the freefalling stock market - and we may start to see results in the coming months," Craig Erlam, market analyst at Oanda said.

Capital Economics analysts also noted that, despite the readings being weaker than expected, these "do not change the general picture, which is that growth is recovering on the back of both an improvement in external demand and a policy induced pick-up in domestic activity".

Elsewhere in Japan, the Nikkei 225 was up 0.46% helped by positive industrial data and a weaker yen.

The Tankan index for the second quarter beat expectations, showing a stronger improvement in the business conditions. The results were driven by a stronger manufacturing sector, where the business condition and outlook came better than expectations.

Still in economic data, the Japan manufacturing PMI came at 50.1 in June, down from 50.9 a month earlier but ahead of expectations of 49.9.

Markit's economist Amy Brownbill said: "The rate of improvement in operating conditions at Japanese manufacturers slowed in June. Production growth weakened alongside a decline in new work intakes.

"According to anecdotal evidence, a reduction in capital investments and challenging economic conditions led to the recent contraction in total new orders."

In the corporate world, Suzuki Motor lost 3% after its chief executive Osamu Suzuki named his son as his successor.

The Japanese multinational Sony gained 0.3% one day after declining more than 8% following news it needs to raise $4bn via new shares and bonds to finance production of image sensors for smartphones.

Australia's ASX index was also higher 1.04% helped by an increase in building permits and on hopes of more China stimulus.

According to the Australian Bureau of Statistics, building permits rose 2.4% in May after a contraction of 5.2% one month earlier.

However, Australian Industry Group's performance of manufacturing index fell to 44.2 in June from 52.3 in May.

Asciano jumped 16.84% after the Canadian asset manager Brookfield Infrastructure placed a bid of $9bn for the takeover of the Australian freight logistics company.