Asian shares fell on Thursday as China’s official and private sector manufacturing PMIs confirmed a recovering growth trend. China’s October official PMI rose to 50.2 in October from 49.8 in September, almost matching a forecast 50.3, pointing to expanded factory activity in the world’s second-largest economy.
The final reading of the HSBC PMI hit an 8-month high of 49.5.
The MSCI index of Asia-Pacific shares outside Japan fell 0.5 percent after ending October with a 0.5 percent gain, in contrast to September’s 5.6 percent rise.
The manufacturing data showed mild improvement in Chinese factory activity helped the index trim losses slightly.
“The return of PMI above 50 suggests economic momentum has indeed picked up. It indicates the effect of policy easing may have been stronger than the consensus expected,” Zhiwei Zhang of
Nomura wrote in a comment emailed to Reuters.
A Tokyo-based currency trader said markets may not take the figures at face value as they believe the Chinese authorities would not tolerate a bad number ahead of a once-in-a-decade leadership transition which starts to take place this month.
Australian shares dropped 0.8 percent as miners and banks retreated, while South Korean shares slipped 1 percent, weighed by data showing the country’s manufacturing sector in October shrank for a fifth consecutive month, although the pace of decline slowed.
The reaction in the Australian dollar, which is sensitive to data from China, its largest export destination, was limited with the currency steadying at $1.0370.
“Overall sentiment is brightening and Chinese orders are suggesting a moderate recovery,” said Hirokazu Yuihama, a senior strategist at Daiwa Securities. “But global monetary easing has strengthened currencies of South Korea and Taiwan, where interest rates are relatively higher, hurting their export-led economies and offsetting the general improvement.”
Inflation reports from Indonesia and Thailand and India’s
PMI are among other Asian data due during Thursday’s session. Taiwan’s October PMI improved to a four-month high as a fall in new export orders slowed.
