China's Rising PMI Is Good News for Exporters
Asian markets were mixed Wednesday. In Japan the Nikkei 225 Index climbed 1.2% to 8,927 and in Hong Kong the Hang Seng Index added 0.4% to 20,624. China's Shanghai Composite Index fell 0.6% to close at 2,623.
While manufacturing in the U.S. has dropped to its slowest pace in nearly a year, manufacturing in China is picking up speed, with the Purchasing Manager's Index rising. Business Insider's Vincent Fernando proclaims "Chinese Manufacturing Data Is Awesome," explaining that China has achieved an intentional slowdown "with GDP growth that is decent, but not excessive." In the second quarter, China's GDP grew 10.3% from a year earlier, according to Bloomberg, which is a lower rate of growth as compared to first quarter data. This steady slowdown shouldn't shock the global economy, which is already stressed by factors including a near 10% U.S. unemployment rate.
Japanese companies heavily reliant on exports to China rose today in the hopes that orders will increase. Materials producers advanced with Nisshin Steel surging 3.7%, PAC Metals advancing 3.2% and OKI Electric, a maker of semiconductors and electronics, climbing 3.1%. Fanuc, a robotics company specializing in factory automation, leaped 2%.
Yuasa, a company that makes batteries for cars, computers and other electronics, rocketed up 6.9% after analysts predicted that the company's price could double in the next 12 months and upgraded its rating.
Komatsu, the Japanese maker of machinery used for mining operations, including excavators and bulldozers, gained 1.2%. China is one of Komatsu's most promising markets. Kubota, another industrial machinery company, jumped 1.9%.
Japanese engineering and building companies surged. Obayashi, which plans to complete the Tokyo Sky Tree project by the end of 2011, rallied 3.4%. Plans for the Sky Tree boast two observatories and broadcasting antennas reaching a height of 634 meters. JGC Corp., a builder of factories and nuclear power plants, rose 3.3% and Taisei advanced 2.4%. Japanese real estate companies also headed north today with Mitsubishi Estate rallying 3.3%, Sumitomo Realty adding 2.3% and Tokyu Corp. rising 2.1%
In Hong Kong, Chinese companies helped push the index higher. Anhui Conch Cement jumped 4.3%. Lumena Resources, a Hong Kong-listed mining company with operations in Dahongshan and Sichuan, skyrocketed up 6.4%. The company focuses on extracting fluorescent thenardite, used in making everything from cleaning products and textiles to lighting and pharmaceuticals.
Some Hong Kong real estate companies also shot up today with China Resources Land surging 2.3% and Swire Pacific, which owns and operates the glitzy Pacific Place shopping complex complete with multi-screen cinema and a fantastic Thai restaurant, gaining 2.6%. Other builders declined with China Overseas plunging 2.4% and Henderson Land continuing it's slide to the tune of a 1.9% loss today. New World Development lost 1.1%.
In China, Developers dragged the Index lower as analysts predict a dampening of the property market. Among the biggies, Poly Real Estate slumped 1.3% and Gemdale receded 1.1%, offsetting some of the good cheer.