HONG KONG (Nikkei Markets) — Asian shares outside of Japan edged higher on Monday after two separate surveys showed that China’s manufacturing activity unexpectedly improved last month.
The Nikkei Asia300 Index rose 0.14% to close at 1,302.61.
China’s factory activity expanded in November, according to official data released over the weekend. The official November manufacturing PMI (Purchasing Managers’ Index) came in at 50.2, up from 49.3 in October and better than the 49.5 reading expected by economists polled by Reuters. Another survey reinforced the pickup in activity. The Caixin/Markit PMI, released Monday, rose to 51.8 last month from 51.7 in October.
The official PMI focuses more on large companies whereas the Caixin survey concentrates on small and medium-sized firms.
Morgan Stanley said the official PMI indicating a return to expansion was a sign that growth may be bottoming and it expects “a mini-cycle recovery in China from first quarter of 2020 with no further trade tension escalation and still-accommodative policy.”
If the U.S. and China reach a phase-one deal to prevent further trade tension escalation, it could lend some support to exports and corporate confidence, lifting real GDP growth to 6.0% in the first half of 2020, it added.
Officials of China and U.S. are currently in negotiations to diffuse the ongoing trade conflict between the world’s two largest economies. China’s Global Times newspaper reported over the weekend that Beijing wants Washington to remove existing tariffs as part of the phase-one deal.
A failure to reach a deal could lead to U.S. imposing tariffs on more Chinese goods starting Dec. 15, a development that could have a significant impact on Asian equities.
Among movers on the A300 on Monday, Galaxy Entertainment Group rose 1.6%, leading a broad rally in Hong Kong-listed Macau casino operators. Data released yesterday showed Macau’s gross gaming revenue fell 8.5% from a year earlier in November. JP Morgan said in a note that the data “was unexciting, yet better than feared.”
Sun Pharmaceutical Industries dropped 2.2%. The Indian drugmaker said Monday that the company, along with wholly owned subsidiaries, is a defendant in a multi-district litigation brought by various classes of plaintiffs in a U.S. District Court, alleging a delay in the market entry for three generic drugs.
Bajaj Auto lost 0.8% after total sales volume of the Indian motorcycle maker declined 1% In November from a year earlier. Carmaker Maruti Suzuki India fell 1.8% following a 1.9% fall in monthly sales and Tata Motors shed 0.3% amid a 25% decline.
Bharti Airtel advanced 3.7% and Vodafone Idea surged 14% after the Indian telecom operators increased mobile tariffs. Reliance Industries, the parent of Reliance Jio Infocomm, added 2.3%.
QL Resources rose 0.7% after the Malaysian agri-food company reported a 15% year-on-year increase in its second-quarter net profit.
–Nimesh Vora