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Asian Stocks Edge Higher After China PMI

Reuters and CNBC.com
Thursday, 1 Nov 2012 | 5:37 AM ET

Asian stock markets were mostly higher on Thursday as China's official and private sector manufacturing PMIs confirmed a recovering growth trend, boosting Shanghai markets whilst trying to convince regional investors the slowdown was bottoming out.

China's October official PMI rose to 50.2 in October from 49.8 in September, almost matching a 50.3 reading forecast, pointing to expanded factory activity in the world's second-largest economy.

Investors are expected to turn their attention to Friday's U.S. nonfarm payrolls data. The monthly government jobs report, which is expected to show 125,000 jobs added in October, will be the last before the Nov. 6 presidential election.

The FTSE CNBC Asia 100 Index, which measures markets across Asia, inched down 0.4 percent.

Japan's Nikkei average inched up as a pick-up in Chinese manufacturing data outweighed weakness in Panasonic, which tumbled by nearly a fifth after it forecasted huge losses for a second straight year.

The Nikkei closed up 0.2 percent to 8,946.8 whilst the broader Topix index edged up 0.9 at 743.32.

Consumer electronics firm Panasonic plunged 19.4 percent, itting their lowest close since 1978, data from Thomson Reuters Datastream showed. It was the most-traded stock on the main board by turnover after forecasting a net loss of almost $10 billion for this business year as it seeks to clean house with writedowns.

TDK and Fujifilm Holdings also slumped 5.9 and 4.9 percent respectively after cutting their full-year outlooks amid sluggish global growth, but mobile operator Softbank gained 3.6 percent after posting better-than-expected quarterly results.

Sharp dropped 1.7 percent after two sources said the struggling TV maker is planning to revise its full-year net loss forecast to 450 billion yen from a previous outlook for a 250 billion yen loss.

Mazda Motor cut its earnings outlook but surged 7.4 percent as its revised full-year operating profit forecast of 25 billion yen was ahead of a market consensus of 23 billion yen.

Other gainers lending support to the market included Murata Manufacturing, which climbed 6.4 percent after the Apple supplier's second-quarter operating profit came in above the market consensus.

Mainland China shares started November on a strong note, posting their best performance in more than three weeks, boosted by positive economic data and measures by some city governments to ease restrictions on the property sector.

The state-run China Securities Journal reported that as many as six Chinese cities have sought to spur housing demand by making it easier to obtain funds for buyers that could, in turn, support land sales, a major revenue source for local governments.

The CSI300 Index of the top Shanghai and Shenzhen listings closed up 1.9 percent at 2,297.9. The Shanghai Composite Index rose 1.7 percent. For both indices, this was their respective best daily gain since Oct. 9.

Shanghai-listed Poly Real Estate, among China's largest developers by sales, jumped 4.4 percent to its highest level since July. The Shanghai property sub-index was a standout outperformer among sectors, rising almost 4 percent. China Vanke jumped 4.6 percent in Shenzhen.

Hong Kong shares closed at a new 2012 closing high, boosted by gains in mainland Chinese markets which advanced on hopes that some city governments were easing restrictions on property purchases.

The Hang Seng Index finished up 0.8 percent at 21,821.9, the highest close this year. The China Enterprises Index of the top Chinese listings in Hong Kong ended up 1.1 percent.

Bourse turnover was the highest in about a week as some investors, anxious not to miss out on the next leg up in Chinese equities, poured into some growth-sensitive sectors, reversing early losses for some of the larger Chinese property names. China Overseas Land rose 1.5 percent, while China Resources Land gained 2.8 percent.

The state-run China Securities Journal reported that as many as six Chinese cities have sought to spur housing demand by making it easier to obtain funds for buyers that could, in turn, support land sales, a major revenue source for local governments.

Defensive names were broadly weaker on the day, with Hong Kong & China Gas down 1.5 percent, hit by a UBS downgrade from "neutral" to "sell" after strong recent gains for the Hong Kong utilities counter. UBS cited as a key concern the company's increasing risk profile as it expands into related upstream energy business.

Shares in Seoul fell, led by key manufacturers, as improving China's manufacturing data failed to dispel concerns that South Korea's export growth will remain weak.

The Korea Composite Stock Price Index (KOSPI) ended in negative territory, down 0.7 percent at 1,898.4 points.

Data on Thursday showed South Korean exports in October posted their first annual gain in four months, but a manufacturing survey indicated factory activity continued to shrink and new export orders fell to a 10-month low, evidence of still depressed global demand.

The won has gained more than 5 percent so far this year against the U.S. dollar, compounding problems for exporters.

Blue-chip exporters led the losses, with Hyundai Motor, which announces its October sales data later in the day, falling as much as 5.6 percent, its biggest daily fall in a year. Its supplier Hyundai Mobis also dropped 4.1 percent.

Some analysts cited market talk that Hyundai may announce a recall in the United States. The company did not have any immediate comment.

Shipbuilder Hyundai Heavy Industries also underperformed, falling 4.6 percent.

But state-owned utility Korea Electric Power (KEPCO) bucked the trend, jumping 5.1 percent, as investors focused on defensive stocks.

Domestic oriented SK Telecom gained 2.9 percent, while its smaller rival KT also rose 1.5 percent.

Australian shares closed down 1.3 percent, the biggest one-day percentage loss since late July, as miners and banks dragged on the market and as a rebound in China's manufacturing data failed to boost investor sentiment.

The benchmark S&P/ASX 200 index fell 59.3 points to 4,457.6, slipping below the key 4,500 level.

It rose 0.7 percent to a one-week closing high on Wednesday, and added 3 percent in October, its fifth straight month of gains.

The improved data out of China failed to support the Australian market. Index-heavy BHP Billiton dropped 1.3 percent, while major rival Rio Tinto lost 1.2 percent.

Top lender National Australia Bank fell almost 3 percent following a weak session on Wednesday when it reported a drop in cash profits for the first time in three years.

Other major banks retreated as well, with Westpac Banking falling 1.5 percent and Commonwealth Bank of Australia down 0.8 percent.

Top phone company Testra dropped 1.2 percent, and the world's No.2 blood products maker CSL lost 1.3 percent.

Australia's flagship airline Qantas Airways fell 3 percent ahead of its annual general meeting on Friday. Its ambition to become a premium player in the Asia-Pacific market was meeting stiff resistance from Singapore Airlines' recent alliance with Virgin Australia.

Arrium slumped 12.7 percent as it resumed trade after Noble Group and POSCO dropped a A$1.2 billion ($1.24 billion) takeover bid for the steel and iron ore company.

Australia's largest independent coal miner Whitehaven Coal dropped 1.6 percent, paring losses from earlier trading, as its shareholders voted to keep the company's board intact, refusing to join tycoon Nathan Tinkler to oust the chairman and independent directors.

New Zealand's benchmark NZX 50 index dropped 0.7 percent to 3,931.9.

In India, the BSE Index and the 50-share NSE Index lost 0.2 and 0.5 percent, respectively.

Singapore's Straits Times Index closed down 0.3 percent, whilst Malaysia's KL Composite Index rose 0.2 percent.