Asian Stocks Extend Slump as China Manufacturing Gauge Slides

  • China’s official factory measure falls to three-year low
  • Equity gauges fall from Tokyo to Shanghai, Sydney and Mumbai

Asian stocks fell, extending the biggest monthly loss since May 2012, as a contraction in Chinese manufacturing reinforced investor concerns about the speed of a slowdown in the world’s second-biggest economy.

The MSCI Asia Pacific Index slid 2.3 percent to 127.03 as of 4 p.m. in Hong Kong, as all 10 industry groups retreated. Japan’s Topix index slumped 3.8 percent after capping a 7.4 percent tumble in August.

The Shanghai Composite Index fell 1.2 percent amid concern government intervention will fail to shore up equities. China’s official factory gauge fell to the lowest reading in three years as monetary easing failed to revive old growth drivers.

“It’s not a good set of numbers,” George Boubouras, Melbourne-based chief
investment officer at Contango Asset Management Ltd., which oversees about
A$900 million ($640 million), told Bloomberg TV. “They need innovative
stimulus from the fiscal side and the monetary side. China has still got some
issues ahead of itself.”

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index tumbled 2.1 percent in most-recent trading after the U.S. benchmark slid 0.8 percent on Monday in New York.

Hong Kong’s Hang Seng Index retreated 2.2 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city slid 3 percent.

China’s official Purchasing Managers’ Index was 49.7 for August, matching the median estimate in a Bloomberg survey of economists and down from 50 in July, a report showed Tuesday. Numbers below 50 indicate contraction, with small, medium and large enterprises all below that level last month. The final Purchasing Managers’ Index from Caixin Media and Markit Economics was at 47.3 in August. That was higher than the 47.1 preliminary reading.

Fluctuations in Chinese markets in August rattled investors worldwide. Stocks in Shanghai rallied almost 10 percent over Thursday and Friday on speculation authorities are propping up markets before President Xi Jinping takes the stage at a commemorative parade the government will use to demonstrate its rising military and political might. The city’s equity measure declined 12 percent last month.

M&A, Buybacks

China will encourage listed companies to conduct mergers and acquisitions, buy back shares when prices are low and pay higher cash dividends as the government extends efforts to boost share prices. The steps are aimed at increasing the investment value of listed companies and promoting stable and healthy growth of capital markets, the China Securities Regulatory Commission said in a statement posted on its website on Monday.

Australia’s S&P/ASX 200 Index lost 2.1 percent after the central bank kept its key interest rate at a record-low 2 percent. South Korea’s Kospi index retreated 1.4 percent and New Zealand’s NZX 50 Index was little changed. Taiwan’s Taiex Index fell 1.9 percent and India’s S&P BSE Sensex Index lost 1.5 percent. Singapore’s Straits Times Index slipped 0.5 percent.

Toshiba Corp. slumped 5.3 percent in Tokyo, bringing this year’s losses to 29 percent, after saying it found new accounting problems related to a U.S. unit’s construction project.

The S&P 500 posted its worst month in more than three years in August, falling 6.3 percent as investors harbored concerns about slowing global growth and the impact of a potential interest-rate increase by the Federal Reserve.

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