Asia report: Markets mostly up, though China languishes

Asian markets were mostly in the green after trading on Monday, as many brushed off a slowdown in Chinese manufacturing - although shares in the People’s Republic were not immune.

Japan’s Nikkei 225 was up 0.4% to 16,635.77, reversing losses of as much as 1.2% earlier in the session, while the Topix closed nearly flat, losing 0.07% to 1,321.83, also reversing earlier losses.

In corporate news shares in electronics maker Panasonic slipped 6.95% as traders got their chance to react to disappointing first quarter earnings, released on Friday.

The firm saw operating profit slide to JPY 66.9bn, from JPY 76.6bn at the same time last year.

“[These results are] not bad, given that Panasonic is bearing near-term costs for longer-term growth,” said Jefferies equity analyst Atul Goyal.

Reports also emerged during the day that the firm was planning to raise up to JPY 400bn through corporate bonds, primarily to fund a battery factory for Tesla Motors.

The yen traded slightly weaker against the US dollar, and was last 0.11% behind the greenback at JPY 102.72 per $1.

Shares on the mainland sold off, with the Shanghai Composite closing down 0.87% to 2,953.38, and the Shenzhen Composite losing 1.48% at 1,912.64.

China’s official manufacturing purchasing managers’ index came in during the session with a 49.9 reading in July, representing a contraction, against a Reuters-polled forecast for a 50.0 reading, and down from the flat 50.0 seen in June.

The services sector in the country showed a slight increase in activity during July, however, coming in at 53.9 for the month against 53.7 in June.

China’s alternative, unofficial Caixin China General Manufacturing PMI, which focuses on small-to-medium enterprises, showed an expansion in activity as well, coming in at 50.6 in July against 48.6 in June.

“In the second half of 2016, the traditional manufacturing sector is likely to continue to face strong headwinds as efforts to reduce overcapacity continue,” said ANZ’s Louis Lam and David Qu.

“Today's data do not bode well for GDP growth in H2.”

In South Korea, the Kospi added 0.67% to 2,029.61, while Hong Kong’s Hang Seng Index was up 1.09% at 22,129,14.

Oil prices were down, with Brent crude last losing 1.14% at $43.04 per barrel and West Texas Intermediate down 1.00% at $41.19.

In Australia, the S&P/ASX 200 added 0.45% to 5,587.39, with the energy subindex underpinning the market with a 2.68% gain.

The Aussie dollar was last 0.16% weaker against the greenback at AUD 1.3182 per $1, ahead of the Reserve Bank of Australia’s monetary policy meeting, which begins on Tuesday.

“Despite underlying inflation printing mildly stronger, markets are split between a rate cut of 25 basis points to 1.5 percent and a policy hold," said Mizuho Bank senior economist Vishnu Varathan.

In New Zealand, the S&P/NZX 50 rose 0.1% to 7,356.63 - a new fresh record - led by New Zealand Refining, which was up 2.9%.

The country’s retail scene was left with more than a few holes, as the receivers of fast fashion chains Valleygirl and Temt closed all stores, bar two flagship outlets in Auckland.

Valleygirl and Temt, part of the Valleygirl New Zealand group, entered voluntary administration on 22 July, with receivers appointed four days later.

Management of Valleygirl blamed poor trading at its Australian affiliates, with which it shares suppliers, for putting pressure on its ability to stock stores properly.

New Zealand’s traditionally isolated fashion retail scene has been shaken up in the last year, with the arrival of international chains including Topshop and H&M challenging the slow-moving local market.

Shares of Hallenstein Glasson, which owns Valleygirl rival women's chain Glassons, were up 1.15%.

The Kiwi was last 0.17% weaker against the greenback at NZD 1.3895 per $1.