Asia: Equities advance despite mixed economic data from China

Most Asian equity markets advanced on Wednesday, as investors shrugged off another batch of mixed data from China.

The Shanghai Composite Index rose 0.27%, while Hong Kong's Hang Seng declined 0.22% after official figures showed industrial production grew 5.6% year-on-year in October, compared with a 5.7% gain in the previous month and with analysts’ expectations for a 5.8% reading.

Fixed asset investment expanded 10.2% year-on-year in the first 10 months of the year, in line with analysts' forecasts, while in month-on-month terms the FAI recorded its biggest jump since mid-2012.

There was better news on the retail front, as Chinese retailers reported sales grew 11% year-on-year in October compared with a 10.9% advance in the previous month and analysts’ expectations for an unchanged reading.

“Industrial activity remained subdued last month but a pick-up in investment and strong retail sales suggest that the economy is still on track for a recovery over the coming quarters,” said Julian Evans-Pritchard, China economist at Capital Economics.

However, economic data out of China has been largely disappointing so far this week and analysts expect the People’s Bank of China to come under even more pressure to implement fresh stimulus measures.

“The economic data that has been released from China over the past couple of days is just going to install further pressure on the People’s Bank of China to ease monetary policy further in the hope of reinvigorating economic data,” said FXTM chief market Analyst Jameel Ahmad.

“I still see the heightened potential for one more interest rate cut before the end of the year.”

Elsewhere, Japan’s Nikkei Stock Average climbed 0.10%, while South Korea’s Kospi and Australia’s S&P/ASX 200 gained 0.03% and 0.46% respectively as markets in the Asia-Pacific region remained jittery as investors look for clues over the timing of an interest rates hike.

Last week’s much stronger-than-expected jobs report put the US Federal Reserve firmly on course to raise interest rates next month and boosting the US dollar in the process.

On Wednesday, the greenback gained 0.05% against the yen and was broadly flat against the Australian dollar.