Asia report: Stocks mixed as China factory activity falls further

Stocks in the Asia-Pacific region started 2023 in a mixed state, with Hong Kong’s main bourse leading the gains.

In Japan, markets remained closed for the holiday, as the yen strengthened 0.1% against the dollar to last trade at JPY 130.67.

On the mainland, the Shanghai Composite was up 0.88% at 3,116.51, and the technology-heavy Shenzhen Component was 0.92% firmer at 11,117.29.

Fresh data out of China showed further falls in factory activity in December, with the unofficial Caixin manufacturing purchasing managers’ index (PMI) coming in at 49 for the month.

That was slightly better than the 48.8 reading economists had pencilled in, but was down from 49.4 in November and still below the 50-point mark that separates expansion from contraction.

Caixin data is understood to broadly reflect smaller-to-medium enterprise in the People’s Republic, which official information from Beijing is more defining of large, state-affiliated industry.

“We share the positive outlook of the surveyed firms, in our expectation for a rebound in the Chinese economy from the second quarter onwards, after the worst of the exit waves has passed,” said Duncan Wrigley at Pantheon Macroeconomics.

“China is likely to juice up domestic demand as the economy reopens, including with 10-basis point cuts to one- and five-year loan prime rates, and measures to support household income and jobs.”

Over the weekend the National Bureau of Statistics announced its official manufacturing PMI for December, coming in at 47 for the month.

That was below the 48 market participants had been expecting, and also down from November’s print of 48 as well.

South Korea’s Kospi was off 0.31% at 2,218.68, while the Hang Seng Index in Hong Kong gained 1.84% to 20,145.29.

The blue-chip technology stocks were on the back foot in Seoul, with Samsung Electronics down 0.18%, and SK Hynix losing 0.13%.

Oil prices were in the red as the region went to bed, with Brent crude futures last down 1.92% on ICE at $84.31 per barrel, and the NYMEX quote for West Texas Intermediate falling 2.02% to $78.64.

In Australia, the S&P/ASX 200 lost 1.31%, while across the Tasman Sea, traders in New Zealand were also still enjoying their New Year break.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.87% at AUD 1.4829, and the Kiwi retreating 1.03%$ to NZD 1.5994.

Reporting by Josh White for Sharecast.com.