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Asian Market Update – Friday: Asian stocks rose on regional manufacturing data

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Asian Market Update – Friday: Asian stocks rose on regional manufacturing data

Introduction

This article was posted on Friday, 08:11, UTC.

The Big Question: How solid are the fundamentals for Asia-Pacific equity markets?

Major equity markets in Asia Pacific traded on a positive note on the last trading day of the week, after a slew of data on manufacturing activity for August were released in China, Japan and South Korea.

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In Japan, after the Japan manufacturing PMI was revised downward for August, the Nikkei 225 went in to a downward movement, losing more than 100 points, and trading at 19,660.86 at one point.

The Nikkei 225 later regained some ground and rose 0.2 percent to 19,684.81 at midday in the Asian trading session. The Japan manufacturing PMI was revised to 52.2 from an earlier reading of 52.8.

Japan’s GDP for the quarter ended up 1 percent, exceeding expectations of 0.6 percent growth.

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In China, the Shanghai Composite Index surged a bit in early trading after a key gauge of manufacturing activity pointed to a third month of growth. The Shanghai Composite Index later bounced up and down and was up 0.48 percent to 3,376.95 at midday.

The Caixin-Market manufacturing PMI, which tracks smaller and mostly private companies, rose to 51.6, beating a forecast from Reuters of 50.9. China’s official manufacturing PMI, which tracks large, state-owned firms, rose 0.3 percentage point in August to 51.7 percent.

In South Korea, the KOSPI index dipped slightly to as low as 2,351.37 in morning trading, though it later bounced back a bit. At midday, the KOSPI was down 0.12 percent to 2,360.26. Earlier data showed that the South Korean manufacturing sector is in contraction territory in August, after the Nikkei-Market manufacturing PMI came in at 49.9. However, South Korea’s economy still grew 0.6 percent in the second quarter.

Down under, the ASX 200 was pointing lower in early morning trading but bounced back to gain 0.15 percent to 5,723.30.

In Hong Kong, the Hang Seng was up 0.38 percent to 28,076.37 at midday after opening flat.

Market-sensitive news this week to watch: More economic data from the US, Japan; NAFTA talks; UK’s Brexit talks with the EU; and talks of tax reform in the US.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,684.81 0.2%
China-Shanghai Composite Index 3,376.95 0.48%
Australia-ASX 200 5,723.30 0.15%
Hong Kong-Hang Seng 28,076.37 0.38%
South Korea- KOSPI 2,360.26 -0.12%

Cryptocurrencies

The bitcoin price subdued overnight during the Asian trading session after surged to as high as $4,770. The digital currency was changing hands at about $4,747 at midday, up 0.28 percent.

The ethereum price saw a solid gain overnight, having surged from about $386 to about $393 at midday in the Asian trading session, up about 1.66 percent.

Boost or competition? Major banks, including Barclays, Credit Suisse, HSBC and State Street are poised to jump on the blockchain bandwagon, as they joined hands in a project for blockchain-based cryptocurrency banking called the Utility Settlement Coin or USC.

Currencies

The Japanese yen lost 0.03 percent against the US dollar at midday, trading at 109.99 per dollar.

The Chinese yuan continued on a weeks-long rally against the greenback on Friday, having strengthened 0.13 percent to 6.5802 per dollar.

The Australian dollar also remained on an upward path against the US dollar since Thursday, despite small fluctuation. The AUD/USD was at 0.7950, up 0.06 percent.

Commodities

WTI Oil was down 0.30 percent to 46.93 per barrel.

Brent Crude gained 0.02 percent to $52.73 per barrel.

Gold was down 0.04 percent to $1,319.74 an ounce.

Business News across Asia

In China, the date for the most important political event for the world’s second-largest economy has been announced. October 18 is the day for the meeting of the National Party Congress held every five years. At the meeting, a wide-spread leadership reshuffling is expected at various government agencies. President Xi Jinping will most likely remain president and Secretary General of the Communist Party of China.

Take away: In addition to the leadership shake-up, global investors will likely keep a close eye on any signals of how the Chinese government will manage the massive economy, which has seen some positive development but still face mounting pressure.

In Japan, Visiting UK Prime Minister Theresa May appears to have secured a pledge from her Japanese counterpart Prime Minister Shinzo Abe on a potential post-Brexit trade deal. The two leaders said their countries will seek a bilateral deal after the UK officially exits from the EU.

Take Away: The deal is far from being completed and still faces some obstacles because reports say Japan’s Abe had repeatedly voiced doubts about the UK’s decision to leave the EU even with the presence of May.

In India, once the world’s fastest-growing major economy seemed to have lost momentum in the second quarter ended in June. The Indian economy grew 5.7 percent during quarter, significant lower than the 7.1 percent during the same period last year and the slowest in three years.

Take away: With such a slow growth, there will be a lot of finger-pointing in the country. Prime Minister Narendra Modi will surely see a lot of the blame being pointed in his direction after a sudden ban on more than 80 percent of cash in the country last year and an ongoing effort to implement a national goods and services tax.

In South Korea: Kim Jong-un of North Korea took much of news headlines in South Korea after firing a ballistic missile over Japan’s territory into the Pacific Ocean. The latest news Friday is the US, Japan and South Korea carrying out a live-firing training in the Korean Peninsula on Wednesday involving some of the trio’s most advanced warplanes.

Take Away: With tensions escalating, the South Korean government still appears to be inclined to diplomatic solutions, as a presidential spokesperson shot down the possibility of deploying US nuclear weapons in the country. But as warplanes and missiles crowd the area, miscalculations could take place, so watch out for your interest in the area.

 

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Fredrik Vold

Fredrik Vold

Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He mainly follows the stock and forex markets, and is always looking for the next great alternative investment opportunity.

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