Asia report: Most markets higher, China manufacturing rebounds in December

Stock markets in Asia were mostly higher on Tuesday, with the exception of mainland China, although technology plays in Hong Kong were in the red after new regulations were announced by Beijing.

In Japan, the Nikkei 225 was up 1.77% at 29,301.79, as the yen weakened 0.54% against the dollar to last trade at JPY 115.94.

Fashion firm Fast Retailing was down 0.72%, while among the benchmark’s other major components, automation specialist Fanuc jumped 2.01%, and technology conglomerate SoftBank Group gained 0.88%.

The broader Topix index was 1.9% firmer by the end of trading in Tokyo, closing at 2,030.22.

On the mainland, the Shanghai Composite was down 0.2% at 3,632.33, and the smaller, technology-heavy Shenzhen Composite was 0.1% weaker at 2,527.70.

Fresh data out of China showed factory activity expanding in the People’s Republic in December, with the unofficial Caixin/Markit manufacturing purchasing managers’ index (PMI) coming in at 50.9 for the month.

That was above the 49.9 reading in November, and was above the 50-point mark that separates expansion from contraction.

It was also slightly ahead of Reuters-polled expectations for a reading of 50 points.

China’s official manufacturing PMI, meanwhile, came in at 50.3 on its release last week, which was also an acceleration from the 50.1 reading in November.

The official PMI data from Beijing is more indicative of large, state-affiliated industry, while Caixin’s information is understood to paint a better picture of smaller manufacturers.

“The strongest print for the Caixin manufacturing survey since June was led by a surge in the output component, to 52.7 from 50.1 in November,” said Pantheon Macroeconomics chief China economist Craig Botham.

“New orders also rose sharply, to 50.9 in December, from 49.4.

“External demand, however, remained lacklustre, with new export orders at 49.9 from 49.8 in November.”

Botham noted that firms indicated shipping difficulties remaining an obstacle, alongside a resurgent pandemic in many partner countries, with delivery times increasing again.

“Inflationary pressures have eased further, following a very sharp drop in November which correctly predicted the pullback in PPI inflation.

“Input and output price subcomponents both fell in December, suggesting further declines in producer price inflation to come.”

Craig Botham said the outperformance relative to the official PMI manufacturing reading suggested a regional divergence, with coastal provinces and the private sector seeing faster growth in December.

“But the opposite happened in November, when the official survey saw a strong rebound.

“For now, this looks more like catch-up than anything more fundamental.”

South Korea’s Kospi managed gains of 0.02%, or just 0.47 points, to 2,989.24, while the Hang Seng Index in Hong Kong was 0.07% firmer at 23,289.84.

The Hang Seng TECH Index was down 1.04%, however, with Meituan losing 1.7% and Tencent off 0.84%.

Those moves for technology shares in Hong Kong came after regulators in Beijing announced that internet platforms holding data for more than one million users would need to undertake a security review before listing on overseas markets, from 15 February.

Floundering property development giant China Evergrande was also in focus, closing up 1.26% after surging more than 6% at one point during the session.

The company announced during the day that it contracted CNY 443.02bn in property sales in the 2021 calendar year, which was a fall of almost a third when compared to 2020.

Seoul’s blue-chip technology stocks were mixed, with Samsung Electronics up 0.13%, while SK Hynix closed flat.

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.73% at $79.56 per barrel, and West Texas Intermediate rising 0.75% to $76.65.

In Australia, the S&P/ASX 200 rose 1.95% to 7,589.80, while across the Tasman Sea, New Zealand’s markets were closed for the second day of the country’s New Year holiday.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.21% at AUD 1.3878, and the Kiwi advancing 0.04% to NZD 1.4728.