Asia report: Most markets higher as China industrial profits surge

In Japan, the Nikkei 225 was up 0.4% at 26,644.71, as the yen strengthened 0.21% against the dollar to last trade at JPY 104.04.

Automation specialist Fanuc was down 0.02%, while among the benchmark’s other major components, fashion firm Fast Retailing rose 0.65% and technology giant SoftBank Group added 2.27%.

The broader Topix index was 0.47% firmer by the end of trading in Tokyo, closing at 1,786.52.

On the mainland, the Shanghai Composite was ahead 1.14% at 3,408.31, and the smaller, technology-heavy Shenzhen Composite advanced 0.34% to 2,253.12.

Industrial profits in China rocketed 28.2% year-on-year in October, according to fresh data released by the National Bureau of Statistics.

Pantheon Macroeconomics senior Asia economist Miguel Chanco said the result was much stronger than the modest acceleration that the consultancy had expected.

“Base effects were extremely favourable, though, significantly flattering the headline - official unadjusted profits collapsed by just over 25% month-on-month in October last year.

“Not surprisingly, the breakdown showed equally sharp improvements year-on-year,” he said.

“Manufacturing profits growth surged to 62% from 16% in the previous month, while the contraction in mining profits eased substantially, to -10% from -28%.”

Chanco said October was certainly a solid month, base effects aside.

“On our adjustment, total industrial profits rose by 3.3% month-on-month, stronger than the 1.8% gain in September and a smidge above the prior three-month average of 2.9%,” he explained.

“Encouragingly, manufacturing sales are now starting to rise clearly and persistently, after a long period of stagnation from the second half of 2018 to the first half of this year.”

They rose by an adjusted 2.0% last month to a near three-year high of RMB 8,195bn, Chanco noted.

“Base effects will continue to flatter headline profits growth heading into 2021, given the significant collapse in the first quarter of this year when China went into lockdown.

“Softening month-on-month industrial production growth and stubborn PPI deflation, however, suggest that trends at the margin will remain more tepid than the headline suggests.”

South Korea’s Kospi managed gains of 0.29% to 2,633.45, while the Hang Seng Index in Hong Kong rose 0.28% to 26,894.68.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics rising 0.29%, while SK Hynix fell 0.6%.

On the coronavirus front, concerns were being raised over the vaccine candidate from AstraZeneca and the University of Oxford, with analysts from biotechnology investment bank SVB Leerink writing that they believed it would “never be licensed in the US”.

“This belief is based on the design of the company’s pivotal trials which does not appear to match the FDA’s requirements for representation of minorities, severe cases, previously infected individuals and elderly and other increased risk populations,” the bank wrote.

AstraZeneca defended the vaccine, pointing out that the analysis released earlier in the week, which showed an average efficacy of 70%, was only interim data, with more results to follow.

Oil prices were mixed as the region entered the weekend, with Brent crude last up 0.59% at $48.08 per barrel, and West Texas Intermediate rising 0.78% to $45.28.

In Australia, the S&P/ASX 200 was the region’s odd one out, falling 0.53% to 6,601.10, as the hefty financials subindex lost 0.5%.

The country’s ‘big four’ banks were all in the red, with Australia and New Zealand Banking Group down 0.69%, Commonwealth Bank of Australia losing 0.47%, National Australia Bank off 0.68%, and Westpac Banking Corporation 0.87% weaker.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.3% higher at 12,639.83, as medical equipment maker Fisher & Payker Healthcare bounced 4.49%.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.21% at AUD 1.3556, and the Kiwi advancing 0.2% to NZD 1.4244.