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Share Name | Share Symbol | Market | Type |
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Australia And New Zealand Banking Group Limited | ASX:ANZ | Australian Stock Exchange | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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-0.12 | -0.43% | 28.04 | 28.04 | 28.10 | 28.07 | 27.85 | 27.87 | 2,281,624 | 07:16:09 |
BEIJING--Two measures of China's factory outlook registered an improvement in March, suggesting that government moves to boost the world's second-largest economy are having an impact.
While markets rose on the news, large state-owned companies in line for government contracts appeared to be the major beneficiaries behind Wednesday's better-than-expected readings, economists said. There was little evidence that smaller, private companies are seeing much improvement, they said.
Nor is the uptick enough to counter weak fundamentals or signal a turnaround soon, they added, suggesting that Beijing will need to adopt more easing measures in coming months.
"In March, there's always a pickup after Chinese New Year, but this year it's weaker than the seasonal pattern," said Mizuho economist Shen Jianguang. "For all companies, profit growth has declined. The slowing trend is clear. It's a more difficult environment, with orders slowing and a lower order book."
The China Federation of Logistics and Purchasing said Wednesday that China's official Purchasing Managers Index rose to 50.1 in March from 49.9 in February, its first time in positive territory since December. This was above the median 49.8 forecast by a Wall Street Journal poll of nine economists.
A PMI reading above 50 indicates an expansion in manufacturing activity over the prior month, while a reading below 50 points to a contraction.
Economists said the higher March figure for the official PMI, a measure that tends to reflect the outlook for large companies, suggests that monetary easing and government spending on road, energy, water and airport projects are beginning to filter through to state-owned corporations.
The Hong Kong and Shanghai stock markets rose by nearly a half percentage point on Wednesday morning on the news, while the China-sensitive Australian dollar jumped against its U.S. counterpart.
Subindexes measuring new orders and new export orders both fell in March from February levels, while the production subindex improved, according to the logistics and purchasing federation, which issues the data with the National Bureau of Statistics.
A competing measure, the HSBC China manufacturing PMI, fell to a final reading of 49.6 in March from 50.7 in February, HSBC Holdings PLC said Wednesday.
"Small enterprises and export-oriented businesses remain under significant pressure," said UBS economist Harrison Hu.
China set an annual growth target in March of about 7%, down from actual growth of 7.4% in 2014, its slowest pace in nearly a quarter century. With momentum slipping and companies facing mounting debt, Beijing has in recent months put through two interest-rate cuts and a reduction in bank-reserve requirements. On Monday, it reduced down payment requirements for home buyers in a bid to support the troubled property market.
But these measures probably aren't enough to put a floor under the wobbly economy, economists said. Investment, retail sales, industrial production and property figures were all significantly weaker than expected in January and February, and a weak first-quarter growth figures due out in mid-April could complicate Beijing's bid to hit its roughly 7% annual target.
"The government won't allow the growth to slip below 7%," said ANZ economist Zhou Hao. "I think there will be more support measures being rolled out soon to stabilize market expectations."
Those measures could include increased infrastructure spending, additional interest-rate reductions and more cuts in bank reserves, economists said, which could see growth start to pick up in the second quarter.
"There's a lot more to be done," Mizuho's Mr. Shen said. "But it's good the government has started to respond."
China's official nonmanufacturing PMI, a gauge of activity beyond the factory floor, fell to 53.7 in March from 53.9 in February, the government said Wednesday.
Grace Zhu and William Kazer
Write to Mark Magnier at mark.magnier@wsj.com
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