Asian Markets Slip on Downbeat Chinese Economic Data

China’s factory activity shrinks at fastest pace in three years, reviving growth fears

Loss of Momentum

• China factory activity shrinks at fastest pace in 3 years
• Losses on Wall Street also soured Asian sentiment
• Crude oil futures give back a bit of recent surge

Asian shares fell on Tuesday and the dollar struggled after twin surveys showed China’s manufacturing sector is in the grip of its worst slump in several years, raising fresh fears about the health of its economy.

China’s official Purchasing Managers’ Index (PMI) fell to 49.7 in August from the previous month’s reading of 50.0, the weakest showing in three years.

Separately, the private Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) showed a final reading of 47.3 in August, the lowest since March 2009.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3%, erasing its early gains. The index shed more than 10% in the month of August, its worst monthly performance since 2012, on fears of global fallout from slowing momentum in China.

The broad based decline in almost all components of the PMI hints the central bank was right in introducing further easing measures on 25 August.
— Chester Liaw, Economist, Forecast Pte

Losses on Wall Street also soured Asian sentiment after comments from Federal Reserve Vice Chairman Stanley Fischer heightened fears among investors of a potential US interest hike in September.

Japan’s Nikkei stock index was down 1.6% in early trade. The Nikkei lost 8.2% in August, its biggest monthly decline since January 2014.

Chinese shares opened lower, with the Composite Index down 1.8% and the CSI300 index down 2.2%. Both indexes skidded around 12% in August, their third straight monthly decline. China’s stock markets have now lost nearly 40% of their value since mid-June despite unprecedented government support steps.