Bloomberg News

Asian Stocks Fluctuate on China Data, U.S. Budget Concern

December 03, 2012

Asian stocks swung between gains and losses as Chinese manufacturing data added to signs of recovery while U.S. lawmakers continue to debate over a budget compromise to avert a so-called fiscal cliff.

Metallurgical Corp. of China, an engineering contractor and equipment manufacturer, climbed 4.4 percent in Hong Kong. Shimizu Corp., a construction company, advanced 4 percent in Tokyo on speculation a deadly highway-tunnel collapse will reduce opposition to more public works spending. Li & Fung Ltd., a supplier of toys and clothing to retailers including Wal-Mart Stores Inc., slipped 3 percent.

The MSCI Asia Pacific Index was little changed at 124.62 as of 4:28 p.m. in Tokyo, erasing gains of as much as 0.5 percent. The measure advanced 14 percent through Nov. 30 from this year’s low on June 4 as central banks added stimulus to spur growth and data showed China’s slowdown may be ending.

“While there are signs China’s economy might be bottoming, we don’t expect growth to go back to double-digit rates,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. “We expect no big stimulus or monetary easing from China. The U.S. fiscal cliff is a concern even though we think they’ll eventually come up with some kind compromise.”

U.S. lawmakers are debating the budget to help avert the so-called fiscal cliff. Failure to come up with a budget deal would trigger more than $600 billion of automatic tax increases and spending cuts next year.

The Nikkei 225 Stock Average (NKY) gained 0.1 percent in Tokyo and South Korea’s Kospi Index added 0.4 percent. Australia’s S&P/ASX 200 Index climbed 0.6 percent. Hong Kong’s Hang Seng Index dropped 0.9 percent, while China’s Shanghai Composite Index slid 1 percent.

China PMI

China’s official manufacturing Purchasing Managers’ Index rose to 50.6 in November, the highest reading in seven months, data released by the National Bureau of Statistics and China Federation of Logistics and Purchasing on Dec. 1 showed. A reading above 50 indicates expansion.

A separate survey by HSBC Holdings Plc and Markit Economics that focuses on smaller businesses also showed expansion. Services industries maintained their pace of growth last month, according to a PMI report released today.

The Chinese government may maintain its annual economic growth target at 7.5 percent next year in a sign the new leadership headed by Xi Jinping won’t tolerate a bigger slowdown from the lowest goal since 2004. Nine of 16 analysts surveyed over the past two weeks by Bloomberg News forecast the government will set a goal unchanged from 2012, while six expect a decline to 7 percent and one sees an increase to 8 percent.

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The gauge closed little changed on Nov. 30 and ended 0.5 percent higher for the week as investors watched developments in government budget negotiations amid better-than- anticipated economic reports.

The MSCI Asia Pacific Index (MXAP) advanced last week amid optimism U.S. lawmakers would agree on a budget deal that will help avert the fiscal cliff and as the frontrunner to become Japan’s next prime minister this month repeated calls for stimulus. The gauge traded at 14.1 times estimated earnings, compared with 13.6 times for the S&P 500 and 12.5 times for the Stoxx Europe 600 Index.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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