The Asian equity benchmarks ended mostly in red on Tuesday, as shrinking Chinese manufacturing stoked concern the global economy may falter. Activity in China’s factory sector contracted in December for the first time in seven months, the latest in a string of weak economic indicators that will intensify calls for more stimulus measures to head off a hard landing. The flash HSBC/Markit manufacturing purchasing managers’ index (PMI) fell to 49.5 in December from November’s final reading of 50.0. The new orders sub-index fell to 49.6, the first contraction since April. A reading below 50 indicates contraction, while one above 50 points to expansion on a monthly basis. China will adjust its import and export taxes from January 1 as part of a larger effort to re-order trade to foster economic growth. Foreign investment into China accelerated in November, despite a worsening slowdown in the world’s second-largest economy and concerns over business risks. Foreign direct investment (FDI) -- which excludes financial sectors -- rose 22.2% year-on-year, totaling $10.36 billion.
Prime Minister Shinzo Abe’s election win strengthened his hand to move beyond the fiscal and monetary stimulus that brought an end to deflation in his first two years. The tougher task for Abenomics 2.0 will be to boost Japan’s growth potential. First up for the next Abe administration will be completing left-over fiscal measures -- a supplementary budget of as much as 3 trillion yen ($25 billion), and replacement legislation for the sales tax, to delay the next increase to April 2017. The new cabinet will be inaugurated on December 24.
Asian Indices | Last Trade | Change in Points | Change in % |
Shanghai Composite | 3,021.52 | 68.10 | 2.31 |
Hang Seng | 22,670.50 | -357.35 | -1.55 |
Jakarta Composite | 5,026.03 | -82.41 | -1.61 |
KLSE Composite | 1,673.94 | -23.37 | -1.38 |
Nikkei 225 | 16,755.32 | -344.08 | -2.01 |
Straits Times | 3,215.09 | -79.05 | -2.40 |
KOSPI Composite | 1,904.13 | -16.23 | -0.85 |
Taiwan Weighted | 8,950.91 | -34.72 | -0.39 |
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