Asia: Equity markets struggle for direction amid more sluggish data from China

Asian markets began the week on a mixed note, as sluggish data from China tempered sentiment in the region.

The Shanghai Composite Index closed up 0.27%, despite disappointing industrial profits figures.

According to the country’s National Bureau of Statistics, industrial profits in August declined 8.8% year-on-year compared with a 2.9% drop in the previous month, registering its biggest drop since records began in October 2011.

“Growth [was] hurt by currency devaluation and financial market volatility, which just adds to the growing slowdown worries overshadowing the world’s number two economy and impacting the commodities space,” said Michael van Dulken, head of research at Accendo Markets.

Meanwhile, the crackdown on illicit margin lending saw outstanding margin loans amount to 581bn yuan (£59.8bn) as of 25 September, compared with a 2.26trn yuan peak in June.

Over in Japan, the Nikkei 225 Stock Average slid 1.3% after Haruhiko Kuroda, the governor of the Bank of Japan (BoJ), warned inflation would not reach the central bank’s 2% target without a further boost in the employment market.

Kuroda added he expects the price target to be reached within the first half of next year but reiterated the BoJ would be prepared to take action if it considered the overall price trend to be changing.

Australia’s S&P/ASX 200 climbed 1.42%, boosted by news that M2 Group, whose shares rallied as high as 18.5%, agreed to a merger proposal with rival Vocus Communications in a deal that would build the country’s fourth-largest telecom company.

Elsewhere, Singapore’s FTSE Straits Times dropped 1.44%, falling into bear market territory – a 20% decline from a recent peak – as a slowdown in the Chinese economy and concerns over global business climate have hit commodities prices.

“Emerging market fragility in addition to the developments involving the growth in China were the ingredients which promoted a risk-off environment that instilled bullish momentum within gold,” said FXTM research analyst Lukman Otunuga.

“This precious metal has regained its safe haven glimmer and recent USD vulnerability saw prices surge to new monthly highs.”