By Brad Frischkorn
China shares gained Wednesday, extending a whirlwind first
quarter rally, despite signs of weakness in the country's
economy.
Chinese firms trading in Hong Kong were up 1.3%, while the
Shanghai Composite Index was up 0.7%. The latter benchmark of
mainland stocks had gained 16% since the beginning of the year as
of Tuesday's close, raising fears of a bubble driven by new
domestic investors. Analysts attributed the latest gains to
speculation of further easing from Beijing.
On Wednesday, the HSBC China Manufacturing Purchasing Managers'
Index, a gauge of nationwide manufacturing activity, fell to a
final reading of 49.6 in March from 50.7 in February, according to
HSBC Holdings PLC. The contraction comes on the heels of a
better-than-expected official manufacturing PMI report from China's
National Bureau of Statistics, with the gauge rising to 50.1
compared to 49.9 in February.
Japan stocks led Asian markets mostly lower following a
worse-than-expected survey of business sentiment, a weaker dollar
and an overnight Wall Street selloff.
The Nikkei Stock Average fell as much as 1.5% before rebounding
off its lows, and was last at 19078.81, off 0.7%.
The dollar was sharply lower against the yen, at Y119.70--bad
for Japanese exporters--after the Dow Jones Industrial Average, the
S&P 500 and the Nasdaq fell.
Some traders saw a weak result from the Bank of Japan's
quarterly tankan survey--published minutes before the market
opened--as providing the biggest and most viable reason to sell
stocks. Sentiment among Japan's big manufacturers barely changed in
the three months to January, despite expectations that the weak yen
would improve their mood.
There is a confluence of sell motives at work, said Daisuke Uno,
strategist at Sumitomo Mitsui Banking Corp. "Investors expected
more from the BOJ tankan result, and there was a lot of hype about
record corporate profits for the just-ended fiscal year," Mr. Uno
said. "And then there is just routine profit-taking after a good
quarter for the Nikkei."
The Nikkei booked an advance of 10% through the first three
months of 2015.
Write to Brad Frischkorn at bradford.frischkorn@wsj.com
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