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(Bloomberg) — Asian stocks dropped, after their best month since May 2009, as industrial companies declined following data signaling a contraction in Chinese manufacturing.
Kobe Steel Ltd. tumbled 6.5 percent in Tokyo after its net- income forecast. China Mengniu Dairy Co slid 8.5 percent in Hong Kong after JPMorgan Chase & Co. cut its investment rating on the stock. Westpac Banking Corp. lost 2.5 percent in Sydney after reporting its slowest profit growth since 2009.
The MSCI Asia Pacific Index fell 1.1 percent to 132.95 as of 4:16 p.m. in Hong Kong. The measure rallied 8.6 percent in October as China cut interest rates and the European Central Bank hinted at potential extra stimulus, while U.S. and Japanese policy makers kept their monetary policies accommodative. China’s first key indicator this quarter, an official factory gauge, missed analysts’ estimates, signaling that the manufacturing sector has yet to bottom out as global demand falters and deflationary pressures deepen.
“While you get the ebbs and flows from this monthly data relative to expectations, the overall outlook is one of timid and sluggish activity in the Chinese economy,” Chris Green, an Auckland-based strategist at First NZ Capital Ltd., said by phone. “We’re not expecting a protracted downturn but it will require further policy response from the PBOC to stabilize the growth profile in China. The bigger thing this week is the U.S. jobs data, which could reinforce the prospects of a December move by the Fed.”
A private gauge of Chinese factory activity in October came in at 48.3, higher than the previous month’s reading but still below the 50 level that denotes the border between expansion and contraction.
Hong Kong’s Hang Seng Index lost 1.2 percent and the Hang Seng China Enterprises Index of mainland Chinese firms listed in the city declined 1.5 percent. The Shanghai Composite Index slid 1.7 percent. The gauge last month posted its biggest monthly advance since April as the Chinese government took measures to end a $5 trillion rout and policy makers introduced stimulus to boost economic growth.
“I’m struggling to see catalysts to encourage the market to take this rally to the next level,” said Tony Farnham, a strategist at Patersons Securities Ltd. in Sydney. “China’s PMI numbers were underwhelming. Manufacturing will probably remain weak as China tries to rebalance its economy away from manufacturing and into services.”
The purchasing managers’ index was unchanged at 49.8 in October, the National Bureau of Statistics said Sunday, compared with the median estimate of 50 in a Bloomberg survey. The non- manufacturing PMI, a barometer of services and construction, fell to 53.1 from 53.4 in September, the weakest since December 2008.
Japan’s Topix index slid 2 percent after the yen gained for a second day against the dollar. While the BOJ refrained from easing monetary policy last week, the Nikkei newspaper reported that the government may introduce additional budget measures if third-quarter gross domestic product, which will be announced on Nov. 16, shows the economy needs aid.
Murata Manufacturing Co. rose 4.4 percent, the biggest contributor to gains on the regional index, after Nomura Holdings Inc. raised its price target on the Apple Inc. supplier, citing better-than-expected quarterly earnings.
Singapore’s Straits Times Index slid 1 percent and India’s S&P BSE Sensex Index slipped 0.8 percent. New Zealand’s S&P NZX 50 Index was little changed, while South Korea’s Kospi index added 0.3 percent. Australia’s S&P/ASX 200 Index lost 1.4 percent.
E-mini futures on the Standard & Poor’s 500 Index dropped 0.4 percent. The underlying gauge of U.S. equities slipped 0.5 percent on Friday as weaker-than-estimated quarterly results weighed on financial and consumer staples shares. U.S. jobs data will be released on Friday.
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