Asia Markets

Tepid China PMI dent sentiment in Asia stocks

A general view of market boards at the ASX Exchange Centre in Sydney, Australia.
Ryan Pierse | Getty Images

Asian stocks fell across the board on Monday, as investors digested a private survey which showed China's mammoth manufacturing sector remaining in a tough spot, though the pace of decline in factory activity slowed in October.

Caixin's purchasing managers' index (PMI) for October edged up to 48.3 from September's fresh six-and-a-half year low of 47.2, official data showed, contracting for an eighth straight month.

China's official purchasing managers' index (PMI) came in at 49.8 for October, according to data released on Sunday by the National Bureau of Statistics (NBS), contracting for a third straight month. The reading was unchanged from the previous month but missed market expectations of 50.0, adding to fears that the world's second-biggest economy may be stalling despite the latest slew of stimulus.

"Over the weekend, official manufacturing and non-manufacturing PMIs continue to point to challenges in China... but we think that the recent targeted stimulus measures will support the economy." analysts from Mizuho Bank wrote in a note issued on Monday. "Overall China may expand by 6.9 percent year-on-year this year, then pick-up to 7.1 percent next year."

Meanwhile, a crackdown by Beijing on illegal futures trading also hurt sentiment in China, after reports of an arrest and an international manhunt emerged over the weekend. According to state-owned Xinhua news agency, Xu Xiang, the manager of Zexi Investment, one of China's largest private money managers, was detained by police Sunday.

At least two mainland-listed stocks — Ningbo Kangqiang Electronics and Deluxe Family — that were bought by Zexi Investments fell by their daily 10 percent limit after news of the arrest.

China markets down

Share markets in China headed further south in the afternoon trading session, with the key Shanghai Composite index finishing 1.7 percent lower.

Banking shares which are seen as a proxy on China's economic growth were among the laggards on Monday. Industrial and Commercial Bank of China (ICBC) — the world's largest bank by assets — widened losses to 1.1 percent. Bank of China and Bank of Communications lost 0.8 and 1.7 percent respectively.

PetroChina which has the heaviest weighting of any Chinese company in the Shanghai index, skidded 2.4 percent.

Among other indexes, the blue-chip CSI300 index closed down 1.6 percent amid choppy trade, while the Shenzhen Composite pared more than 1 percent gains to end 1.3 percent lower.

Hong Kong-listed casino operators turned negative in afternoon trade. Galaxy Entertainment and Sands China surrendered gains to retreat 0.6 and 1.1 percent respectively, following data over the weekend that showed gambling revenue in Macau fell 28.4 percent in October from the same period a year earlier, marking the 17th consecutive month of decline.

HSBC shaved off 1.1 percent after the British lender reported a better than expected 32 percent rise in pretax profit for the third quarter, thanks to reduced costs from regulatory fines. Meanwhile, the broader Hang Seng index dropped 1.3 percent.

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Taiex gains 0.7%

Taiwan's weighted index rose after the Nikkei/Markit Taiwan PMI edged up to 47.8 in October, from 46.9 in the preceding month.

Among gainers, Pegatron Corp. advanced 1.3 percent, while Hon Hai Precision and large-cap Taiwan Semiconductor Manufacturing Co. closed up 0.9 and 0.7 percent respectively.

Shares of Powertech Technology plunged 4.6 percent, losing steam after an early surge on the back of news from late Friday that China's Tsinghua Unigroup would take a 25 percent stake in the Taiwanese chip tester and packager.

The Taiwanese government on Friday announced a stimulus package to boost domestic consumption, after advance estimate of third-quarter gross domestic product showed Taiwan's economy contracting 1.01 percent from a year ago, worse than the 0.6 percent decline forecast in a Reuters poll.

The data marked Taiwan's first year-on-year decline in quarterly GDP since the global financial crisis in 2009.

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Nikkei skids 2.1%

Japan's Nikkei 225 index slid below the 19,000 mark to settle at a one-and-a-half-week trough.

Stocks with heavy exposure to the mainland were hit amid fresh China-related concerns. Steel producers Nippon Steel and Sumitomo Metal and JFE Holdings tumbled more than 5 percent each, while Kobe Steel slumped 6.5 percent after announcing last Friday that it would cut its production estimates. Construction equipment makers Komatsu and Hitachi Construction Machinery Co declined more than 1 percent each.

Banking stocks such as Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group were also down more than 3 percent each, while near 3 percent losses in heavyweight components such as Fanuc and Fast Retailing took the bourse further south.

Corporate earnings continued to sway market sentiment. Among those hurt by dismal results, Kawasaki Kisen Kaisha tanked nearly 9 percent while Sharp closed down 3 percent, after tumbling more than 4 percent to hit record lows earlier in the session. Yahoo Japan closed down 9.3 percent, hurt by a cut in stock rating by CLSA despite posting a 60 percent rise in operating profit from April to September.

By contrast, Mitsui Chemicals settled up 2 percent after delivering a 123 percent on-year jump in April-September operating profit. Nitto Denko Corp also got a boost from strong earnings, up 5.4 percent.

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Kospi adds 0.3%

South Korea's Kospi index eked out marginal gains on Monday, thanks to gains in its heavyweight components.

Samsung Electronics and Hyundai Motor elevated 0.8 and 1.6 percent respectively, while chipmaker SK Hynix climbed 4.7 percent.

SK Telecom eased 1 percent on the back of local reports that it would be acquiring cable television company CJ HelloVision. Shares of CJ HelloVision ended Monday flat.

On the domestic data front, South Korea's September current account surplus touched a three-month high of $9.76 billion on a seasonally adjusted basis, central bank data showed on Monday. Exports fell 0.9 percent to $44.5 billion in September, while imports dropped 7.8 percent to $33.2 billion, the data showed. This produced a goods account surplus of $11.3 billion.

The country also released factory activity data on Monday. The Nikkei/Markit PMI ticked down to a seasonally adjusted 49.1 in October, barely changed from 49.2 in the previous month and chalking up a deteriorating trend for an eighth straight month.

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ASX loses 1.4%

Australia's S&P ASX 200 index slumped to its lowest level since October 14, chalking up its sixth session of losses, as a sell-off unfolded in the financial sector. Meanwhile, jitters ahead of the Reserve Bank of Australia's (RBA) policy decision also sapped risk appetite.

Westpac closed down 2.5 percent despite announcing a 3 percent rise in annual cash profit prior to the market open. Australia and New Zealand Banking, National Australia Bank and Commonwealth Bank of Australia declined between 1.8 and 2.3 percent.

Investment bank Macquarie Group widened losses to 4.4 percent on news that it was planning a share purchase plan.

Gold prices at four-week lows in early Asian trade also dented orders for gold producers down under. Evolution Mining and Kingsgate Consolidated were among the biggest losers, down more than 4 percent each, while Newcrest Mining fell 2.4 percent.

Miners turned mixed following the mainland's PMI data. BHP Billiton receded 1 percent and Rio Tinto erased losses to nudge up 0.2 percent. Fortescue Metals rallied 1.4 percent.

On the other hand, Santos surged 1.9 percent after Malaysia's Sona Petroleum agreed to buy its oil field for $50 million.

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STI down 1.2%

Singapore's Straits Times index fell to a three-week low, with China-exposed counters among the worst-hit.

DBS Group Holdings shed 0.5 percent after announcing a 6 percent rise in third-quarter net profit.

Meanwhile, the Turkish lira hit 2.9146 per dollar early Monday, hitting its strongest since August 17, following news that the ruling AK party on Sunday.

Wall Street finished weaker last Friday amid a mixed bag of earnings report. The blue-chip and S&P 500 closed down 0.5 percent each, while the Nasdaq Composite shed 0.4 percent.

— CNBC's Leslie Shaffer contributed to this market report