By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Asian stocks came off their lows
Thursday as a surprise improvement in Chinese manufacturing helped
cheer investors after minutes of the Federal Reserve's last meeting
signaled the central bank was on course to pare bond purchases this
year.
The Shanghai Composite reversed early losses to rise 0.1% in
choppy trading after preliminary data released by HSBC showed
China's manufacturing Purchasing Managers' Index rose to a
four-month high of 50.1 in August, signaling an expansion in
activity. HSBC's final reading for July had put China's
manufacturing PMI at 47.7, an 11-month low.
"China's manufacturing growth has started to stabilize on the
back of modest improvements of new business and output. This is
mainly driven by the initial filtering-through of recent
fine-tuning measures and companies' restocking activities," said
HSBC's chief China economist Hongbin Qu.
Chinese banks paced the advance in Shanghai, with China
Merchants Bank Co. (CIHKY) rising 1.1%, and Industrial Bank Co.
adding 1.8%.
Most other markets cut their sharp early losses after the China
data, with Japan's Nikkei Stock Average off 0.2%, and Hong Kong's
Hang Seng Index 0.3% lower, while South Korea's Kospi and
Australia's S&P/ASX 200 were down 0.5% each.
All four of those markets had dropped more than 1% earlier in
the day, tracking a lower finish on Wall Street. Minutes of the
Fed's July meeting showed Wednesday that central-bank officials had
agreed the U.S. economy will pick up later this year, allowing the
Fed to taper its $85 billion-a-month in bond purchases before the
end of the year.
The officials didn't say exactly when they would reduce the size
of the Fed's stimulus -- a key tailwind for global markets -- and
market participants differed in their opinions.
Economists at Barclays said the minutes didn't change their view
that the central bank would taper bond purchases at its September
meeting.
IHS Global Insight financial economics director Paul Edelstein
expects the Fed to decide in favor of tapering the purchases at its
December meeting and gradually wind down the asset-buying further
through the first half of 2014.
Some others saw the Fed minutes as signaling a wait-and-see
approach.
"The Fed certainly seems to have mastered the art of keeping the
market guessing. ... The only way forward is to continue closely
watching U.S. economic data for clues on how soon we can expect
tapering to start," said IG Markets strategist Stan Shamu.
Exporters and resources were among the sectors on the retreat
Thursdayin Asia, amid concerns the Fed's reduced stimulus would
lower demand for exports from the region and could affect
investment inflows to emerging markets.
Among mining and metals shares, BHP Billiton Ltd. (BHP) gave up
0.9%, and gold extractor Newcrest Mining Ltd. (NCMGF) fell 2.2% in
Sydney, with both off the day's lows.
Likewise, Pacific Metals Co. (PFMTF) lost 2.8% in Tokyo, steel
maker Posco (PKX) dropped 1.1% in Seoul, and energy major Cnooc
Ltd. (CEO) gave up 0.8% in Hong Kong.
Several technology and automobile exporters also lost ground,
with Isuzu Motors Ltd. (ISUZY) falling 2.7%, and Sony Corp. (SNE)
shedding 1.8% in Tokyo, while LG Display Co. (LPL) gave up 1.9% in
Seoul.
However, some insurance stocks provided support to the Japanese
market after recent losses. T&D Holdings Inc. (8795.TO) rose
2.5%, and Dai-Ichi Life Insurance Co. (DCNSF) gained 1.7%.
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