Asia: Equities struggle for direction as Shanghai rebounds

Asian stocks struggled for directions on Thursday, as concerns over the health of the Chinese economy continued to worry investors.

Chinese shares bounced back from an unexpected selloff in the previous session, with the Shanghai Composite Index rising 1.45%, driven higher by smaller stocks.

However, Hong Kong’s Hang Seng, which reopened after a day-long bank holiday, declined 0.63%.

After the close on Wednesday, the People’s Bank of China said it injected 105.5bn yuan (£10.7bn) to 11 financial institutions via medium-term lending facilities as part of its stimulus programme to the country’s banking system.

There was some better news on the data front where the October MNI business indicator for China rose 4.3 points from September to 55.6, the biggest percentage jump since March 2011.

“This supports the Deutsche Bank view that China data will soon stabilise,” analysts at the German bank said.

Japan’s Nikkei Stock Average declined 0.64%, reversing Wednesday’s gains that were driven by hopes of more stimulus after data showed the country’s exports suffered a sharp slowdown in September.

“Decelerating exports are a drag on Japan’s economy, which has been struggling to grow since spring 2014 when domestic demand was sidetracked by its misguided VAT hike,” Mickey Levy, Berenberg’s chief US, Americas and Asia economist.

“With domestic demand soft despite the significant benefits of lower oil prices, the deceleration of exports poses an untimely headwind for economic performance and confidence in Prime Minister Abe’s reform initiatives.”

Elsewhere, South Korea’s Kospi slipped 0.98%, while Australia’s S&P/ASX 200 climbed 0.30%.

On the currencies front, the yen gained 0.16% against the dollar, while the Australian dollar registered a 0.02% gain against its American counterpart.