Asia: Japanese and Chinese stocks up despite disappointing data

Most stock indices in Asia finished higher despite disappointing manufacturing data in China and Japan.

The Shanghai composite index rose 0.36% despite beginning the day in the red due to a weaker-than-expected domestic manufacturing data.

An HSBC purchasing manufacturers index (PMI) survey showed that Chinese manufacturing contracted at a faster rate than expected in April from 49.6 to 49.2, surprising analysts who had expected no change.

Read more: Chinese manufacturing sector PMI slips again in April

Economist Chris Williamson from Markit said: “The drop in the PMI in April clearly represents a disappointing start to the second quarter, raising the possibility of economic growth having lost further momentum compared to the already-weak rate seen in the opening quarter of the year.”

Jim Reid at Deutsche Bank said the China reading was the lowest since April last year and will add to the argument that more stimulus is needed despite the recent bank reserve ratio requirement cut.

However, Hong Kong’s Hang Seng fell 0.38% driven by losses in casino stocks. Galaxy Entertainment was down 0.85% and Macao-based resorts and casinos developer Sands China lost 2.6% after reporting worse-than-expected full-year earnings. Earnings before interest, taxes, depreciation and amortization fell 43% to $531m.

On the bright side, the Nikkei 225 was up by 0.27% despite a decline in manufacturing purchasing manager index (PMI) to 49.7 points in April from 50.3 the month before.

Markit's Amy Brownbill said: “Latest data signalled worsening operating conditions in the Japanese manufacturing sector. New orders continued to fall, while manufacturing production decreased for the first time since July 2014.

“Meanwhile, reports of a favourable yen/dollar rate continued to help improve price competitiveness, as companies noted a rise in new export orders for the tenth consecutive month.”

Australia’s ASX rose slightly by 0.13% despite the negative data from China. The Aussie mining stocks were helped by a rally in iron ore prices.

BHP Billiton gained 0.33% one day after it announced it would postpone some plans to increase iron ore output. However, the company revealed record levels of iron ore and coal production for the nine months of its financial year.