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Asian markets, boosted by trader confidence in Japan, appear to be bouncing back this week after weaker-than expected manufacturing data from China pulled regional indices down.
Earlier, HSBC’s China Flash Purchasing Managers’ Index (PMI) fell to an eight-month low of 48.1 in March. In February, the index was 48.5.
According to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), manufacturing data has been on the decline since August 2013, indicating that China’s growth momentum is continuing to slow down.
The data for March pulled down markets in Shanghai, Hong Kong and Tokyo, but they quickly recovered as fears over the Ukraine appeared to ease.
On Monday, Japan’s Nikkei rose 1.83 per cent, reversing a trend that saw it hit a six-week low; Hong Kong’s Hang Seng index gained 1.10 per cent while South Korea’s Kospi added 0.7 per cent in morning trading.
The Asian market gains appear to indicate that investors are little concerned that the Dow Jones Industrial Average closed down 0.17 per cent and the S&P 500 index fell 0.30 per cent on Friday closing.
The Nasdaq Composite index also capped off last week’s trading down 0.98 per cent.
But Asian markets may yet have a rocky week ahead.
Later on Monday, March manufacturing data is expected to be released in the euro-zone, France, Germany, and the US, while Tokyo investors will be speculating how markets will react as the April 1 consumption tax increase in Japan approaches.
China’s manufacturing output is also likely to kick of new policy measures in Beijing in attempts to stabilize growth. Investors will be looking to see if the Chinese government will show greater flexibility regarding relaxing of private investment restrictions.
Investors are also anticipating some kind of Chinese stimulus programme that will ease lending and support infrastructure.
According to a statement from the China Securities Regulatory Commission, companies on the Shanghai Stock Exchange 50 A-Share index were allowed as of March 21 the option to sell preferred stock in a bid to raise financing.