Asia: Stocks higher despite negative Chinese data

Most Asian equities started the week higher despite negative data published during the weekend.

In China, the Shanghai composite index rose 4.91% despite production prices falling 5.4% in July from -4.8% same time last year. Analysts expected a decline of 5%, while the data hits its lowest level since 2009

The stocks were driven by speculation the government will accelerate mergers in state-owned industrials and telecoms. The negative data also brought hopes of more growth stimulus on its way.

According to the National Bureau of Statistics, Chinese consumer prices rose slightly to 1.6% in July from 1.4% same time last year, which is well below the government’s annual target of 3%.

Still in economic data, imports plunged 8.1% in July, compared with -6.1% one year earlier and forecasts of a 8% decline. Exports also fell 8.3%, driving the country's trade balance down to $43bn fron $46.5bn one month before.

Capital Economics analysts said exports should benefit from a pick-up in growth among China's main trading partners such as the US.

"Meanwhile, stronger infrastructure spending and a much weaker base for comparison in commodity prices should shore up import growth over the coming quarters," they added.

Markus Huber, senior analyst at Peregrine & Black said: “Disappointing Chinese export figures over the weekend have increased the likelihood of more government and central bank stimulus substantially leading to renewed optimism that the worst will soon be behind the world second largest economy."

In other news, Investec decided to downgrade its commodity price forecast due to "evidence of further weakness in the Chinese economy" since the broker's recent mark-to-market update

"There are clear signs, however, that the market is attempting to establish appropriate levels in the 'new normal' environment and we expect the quantum of subsequent share price adjustments to subside."

Elsewhere in Japan, the Nikkei 225 index was up 0.41% thanks to confidence coming from China.

Japanese telecommunications and Internet corporation Softbank gained 2.8% after announcing a $1bn share buyback.

Technology group Japan Diplay, a joint venture by Sony, Toshiba and Hitachi, jumped as much as 15.2% after posting an operating profit of ¥2.2bn during the last quarter.

The yen was 0.3% lower at ¥124.69 against the dollar, with the dollar raising after a solid US jobs report which raised expectations of an upcoming increase in interest rates.

In Australia, the ASX index rose 0.63% on a weaker Australian dollar, which was 0.56% down at $0.74 against the US currency.

In corporate news, National Australia Bank gained 1.52% after posting a 9% increase in profit growth.

Following the results, chief executive Andrew Thorburn said the bank is "well placed to respond to the Australia Prudential Regulatory Authority's announcement of an increase in mortgage risk weights from 1 July 2016".

Consumer electronics retailer JB Hi-Fi jumped 10.6% as it announced a 6.3% rise in net prfits to $136.5m and a share buyback of $15.2m.