HONG KONG: Shanghai and Hong Kong stocks fell Monday after a gauge of Chinese factory activity hit a more than three-year low, but the Nikkei soared following Japan’s decision to slash some interest rates to negative.
In another example of weakness in China’s economy, the official Purchasing Managers Index showed its manufacturing sector shrank in January for the sixth straight month and was now at its weakest since August 2012.
A separate reading from China’s financial magazine Caixin showed a minor improvement but also pointed to contraction.
The latest news follows a string of data indicating that the once-mighty growth rates in the Asian giant are well in the past.
“The manufacturing sector will likely face a tough year ahead on the back of overcapacity, weakening global demand and the government’s plans to tackle pollution,” ANZ economists Liu Ligang and Louis Lam said in a report.
Worries about the slowdown in the world’s second biggest economy — and its leaders’ handling of it — were among the key reasons for a rout across global markets in January that wiped trillions of dollars off valuations.
“The headline number is a disappointment to the market as output and new orders show no signs of a rebound,” said William Wong, head of sales trading at Shenwan Hongyuan Group in Hong Kong.
“Trading this week will remain shallow ahead of the Chinese lunar new year holiday,” he told Bloomberg News.
Shanghai ended 1.8 percent lower and Hong Kong closed down 0.5 percent.
However, Tokyo soared two percent, extending a 2.8 percent gain Friday following the shock announcement from the Bank of Japan that it would effectively start charging lenders to park their cash with it.
The move — intended to expand lending to people and businesses in order to kick-start the economy and fend off deflation — spurred a rally across world markets and sent the yen tumbling.
Adding to the upward pressure in the Japanese market was a 12.4-percent surge in Sony, which on Friday posted a nine-month net profit of almost $2.0 billion thanks to huge demand for its PlayStation video games console and image sensors.
Sydney gained 0.8 percent and Seoul added 0.7 percent. There were also gains in Wellington, Taipei and Bangkok.
Tokyo’s announcement came as central banks from Asia to the Americas look to support world markets after they took a beating in January. The European Central Bank indicated after its most recent policy meeting it was ready to ease monetary policy further in March, while the Federal Reserve held off another interest rate rise last week.
In early European trade London was up 0.5 percent, Frankfurt added almost 0.3 percent and Paris was flat.