China's Manufacturing Downturn Persists, India's Economic Expansion Accelerated

Arjun Pandit
01 Mar, 2024
Mumbai

Asian markets reacted to local economic news and corporate earnings on the final trading day of the week. 

Investors welcomed the acceleration in economic growth in India, but the manufacturing sector struggled for the fifth month in a row in China, and the jobless rate held steady in Japan. 

 

Nikkei In Japan Extends Weekly Gains to Close at a New Record High

Benchmark indexes in Japan advanced, and the Nikkei closed at a new record high after the weak yen, strong corporate earnings, and high expectations related to artificial intelligence supported the advance. 

The Nikkei 225 jumped 2% to 39,963.07, and the Topix advanced 1.3% to 2,709.70. 

For the week, the Nikkei index advanced 1.9% and the Topix index gained 1.6%. 

Tech stocks pushed higher following the rise in the tech-heavy Nasdaq Composite in overnight trading in New York, after an alternative measure of inflation met the market's expectations. 

Screen Holdings, Tokyo Electron, Renesas Electronics, Disco, and SoftBank advanced between 1% and 3%. 

Exporters were among the leading gainers, and Sony Group, Toyota Motor, Honda Motor, Panasonic, and Kawasaki Kisen gained between 0.5% and 1.7%. 

 

China Manufacturing Growth Worries Keep Indexes In Check

Stocks in China faced headwinds after the official survey of manufacturing showed persistent weakness in February. 

The survey of business activities came ahead of the annual meeting of policymakers to set broader economic targets and direct spending to struggling industries.

The official manufacturing purchasing managers' index decreased to 49.1 in February from 49.2 in January, the National Bureau of Statistics reported Friday. 

The index declined for the fifth month in a row, highlighting the difficult task ahead for policymakers despite the government pouring considerable resources into reviving the struggling sector. 

The non-manufacturing index, which includes business sentiment in services and construction, advanced to 51.4 from 50.7 in January. 

The official composite PMI, which measures sentiment in manufacturing and services, was unchanged at 50.9, indicating a slight growth in manufacturing and business activities. 

February data are likely to be revised sharply because of the Lunar Holiday, and manufacturing estimates are unreliable during the holiday time. 

The National People's Congress is scheduled to start its annual gathering on Tuesday, and policymakers are set to announce their annual economic growth targets. 

Separately, Caixin General Manufacturing PMI edged higher to 50.9 in February after staying at 50.8 in the previous two months. 

The index showed the strongest growth in factory activities since August 2023. 

The CSI 300 index added 0.4% to 3,529.28, and the Hang Seng index advanced 0.2% to 16,538.67.

For the week, the CSI 300 index gained 1.1%, but the Hang Seng index decreased 0.3%. 

Property developers continued to decline ahead of the policymakers annual meeting, and New World Development dropped more than 6% after the company reported a 25% decline in revenue in the second half of 2023. 

Longfor Group, China Vanke, Sun Hung Kai, and Henderson Land Development declined between 0.2% and 1.3%. 

Tech stocks traded higher, but NetEase decreased more than 3% after the online game developer reported lower-than-expected fourth-quarter revenue. 

Lenovo Group advanced 4.6%, Meituan gained 2.5%, and SMIC increased 1.5%. 

 

India Indexes Soar 1% After Economic Growth Accelerated

Stocks on Dalal Street advanced after the release of core sector output and GDP growth data. 

The Sensex and the Nifty indexes advanced 0.2% in early trading amid broad buying in power, engineering, and financial stocks. 

Foreign portfolio investment outflows in January kept market enthusiasm in check in today's trading. 

Benchmark indexes rallied sharply between October and January, stoking fears of high valuation and driving foreign investors to direct funds to other emerging markets in Taiwan, South Korea, and Indonesia. 

India witnessed an outflow of $2.99 billion, while South Korea attracted $8.4 billion, Taiwan received $4.8 billion, and Indonesia saw $1.2 billion, according to data available from Ticker.com, Bloomberg, and local stock exchanges. 

 

December Quarter GDP Expanded 8.4%

India's GDP in the December quarter rose at a faster-than-expected pace of 8.4%, the National Statistical Office reported late Thursday. 

Farm output shrank 0.8%, the service sector expanded at 7.0% and remained the main driver of the economy, and the manufacturing sector continued its double-digit growth of 11.6% for the consecutive quarter. 

The manufacturing sector benefited from the steady improvement in profit margin after input cost growth remained muted and producers retained higher prices for their final products.

 

India Indexes and Yields 

The Sensex index increased 0.9% to 73,121.61, and the Nifty index rose 0.9% to 22,182.20. 

On the Mumbai stock exchange, 102 stocks traded at their 52-week highs and 18 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.07%, and the Indian rupee strengthened to ₹82.87 against the U.S. dollar.