Asian Markets Review – September 1st 2010

PMI Data Lifted Mood in Japan and Hong Kong

Nikkei 225 Average shot up 102.96 points or 1.17% to end at 8,927.02 after the market’s mood in Asia brightened early by economic data coming from China and Australia.

PMI data reported by China Federation of Logistics and Purchasing (CFLP) for the manufacturing sector in China was up from 51.2 in July to 51.7 in August. Similarly, another PMI data compiled by HSBC-Markit Economics also showed improvement as the index rose to 51.9 from 49.4, clawing back from the contraction zone (<50) to the expansion zone. The data was able to lift the mood, calming the market’s concerns over the potential slowdown in China due to the government’s measure to stem growth.

Australian GDP due on Wednesday also provided support as economic growth improved to 1.2% in 2Q from 1Q which was at 0.7%. The GDP figure was better than the market consensus of 0.9%.

From Japan, the auto industry enjoyed a 47% rise in August year-on-year. The sales reached 290,789 units and were the highest jump since 1972. Government’s subsidy helped spurred the sales, but it would expire soon late this month. Toyota was at the lead with sales of 130,092 units, excluding its Lexus model, jumping 43%. Honda was at the second place with 61% jump in sales to 50,195 units. Another auto giant Nissan Motor reached 44,857 units sold or leaped 45%. Auto sales in China were also robust as auto dealers offered lower prices to boost sales and to reduce inventories.

The sales figures were released after the market closed and are likely to influence the shares prices of Toyota, Nissan, and Honda on Thursday. Toyota ended the day at ¥2,857 (-0.10%), Honda at ¥2,807 (+1.01%) and Nissan at ¥645 (+0.47%). Meanwhile, Tokyo Electron was down 0.25% and Advantest slipped 0.44%. Mitsubishi Estate, Sumitomo Metal Industries, and Daikin Industries were gaining 3.33%, 2.03%, and 1.92%, respectively.

In Hong Kong, Hang Seng index settled at 20,623.80, rising 0.43%. Shanghai Composite slipped to 2,622.88 or down 0.60%. Shanghai’s losses were triggered by a report from Xinhua regarding China Banking Regulatory Commission’s (CBRC) statement that the Commission would continue to stem speculative investment in the property sector, supporting the construction of affordable housing and to control risk.

BOC-Hong Kong jumped 3.67% to end at HK$21.20 after the yuan deposit level exceeded the 100 billion yuan mark for the first time. Other stocks with significant gains were China Resources (+3.4%) and China Telecom (+3.19%).

Property stocks scattered at the red zone, except Hang Lung Properties and Sino Land which gained 0.72% and 0.74%, respectively. China Overseas Land and Investment slumped 2.41% to HK$16.20, Henderson Land fell 2.10% to HK$46.60, while Sun Hung Kai Properties settled 0.18% lower at HK$108.80. New World Development was at HK$12.40 or down 0.64%.

Li Ka-Shing’s purchase of Hutchison Whampoa’s shares amounting to 1.163 million shares last week managed to boost Hutchison by 2.4% to HK$58.90. Li’s stakes at the company are now 52.31%, up from 52.28%.

Foxconn resumed its Tuesday’s slide as the shares fell to HK$4.93 or tumbling 4.6%. The fall was due to the poor results which were reported on late Monday.