Asia: Markets mixed as China's data miss implies easing

Japan and Hong Kong bourses closed higher but most other Asian indices were in the red on Thursday.

Sentiment in China was depressed by a raft of disappointing economic data, led by a notable slowing in industrial output growth from 8% to 7.7% in October.

Some analysts believe this would increase the likelihood of further easing from Beijing.

Mike van Dulken, head of research at Accendo Markets, said the figures showed that the economic slowdown had continued into the fourth quarter, "which only goes to stoke the fires of market hope that more stimulus will be forthcoming, buoying risk appetite".

Chinese leaders have apparently discussed lowering their 2015 growth target for gross domestic product (GDP) below 7.5%.

Investors were also reacting to speculation that the People's Bank of China is gauging smaller banks' demand for cash injections to support lending to businesses.

Bloomberg cited an official who said that commercial banks in some provinces of China were applying for collateralised loans from the central bank, which could "run into tens of billions of yuan".

Jim Reid at Deutsche Bank noted some profit-taking in Chinese small caps ahead of the start of the Hong Kong Stock Connect next week.

Retail sales and fixed-asset investment also eased last month, but only very slightly behind forecast.

October's retail sales were up 11.5% year on year, basically in line with the 11.6% expected, though fixed assets investments data was up 15.9% in the year to date compared to last year, versus the 16.0% growth expected.

The credit and money supply stats will be closely monitored on their imminent release.

Danske Bank said the soft Chinese production signalled some downside risks to the country's manufacturing purchasing managers' index.

"However, looking into 2015, we look for a bottom in the global cycle during the first quarter with a moderate recovery in the following quarters."

The Danes said Japanese indicators were "a bit mixed but overall point to stronger growth following the weakness after the VAT hike".

Revised industrial production figures came in at 0.2% higher than expected, reaching 2.9%, lifting the Nikkei 1.14% at close, continuing its powerful rise since the Bank of Japan's recent easing decision and strong rumours of a snap election to reinforce Prime Minister Shinzo Abe's position.