ASIA MARKETS: Asian Shares Fall After China PMI Shows Weakness

By Mia Lamar

Stocks in Asia were mostly lower Friday after an official gauge of Chinese factory activity last month showed signs of weakness.

China's manufacturing Purchasing Managers Index rose to 51.4 in October from 51.1 in September, indicating expansion and edging ahead of economist expectations. New orders and new export orders both fell from the previous month, however.

"Compared with last year, the central government spending pattern seems to be proceeding at a slower pace this year," said Li-Gang Liu, chief China economist at ANZ Banking Group in Hong Kong.

Pressure is rising on China to show it can maintain a recent stabilization of economic growth after a worrying slowdown in the first half of the year.

Stocks on Hong Kong's benchmark Hang Seng Index and China's Shanghai Composite traded flat following the data. In Sydney, the S&P ASX 200 fell 0.2%.

South Korea was a bright spot in the region after the country reported a stronger-than-expected 7.3% rise in exports last month. Economists polled by The Wall Street Journal on average expected a 4.5% rise. Imports rose 5.1%, also more than expected.

Investors have flocked to South Korean stocks since late summer, attracted by the country's strong finances and stable currency. The benchmark Kospi index rose 0.3% Friday.

In Japan, the Nikkei 225 index reversed earlier gains, falling 0.6% despite a weaker yen. The Japanese currency (USDJPY) recently was at Yen98.18 versus Yen98.36 late Thursday in New York.

Technology earnings were on the radar in Tokyo. Sony Corp. (SNE) shares slid 11% after the company reported a wider loss for the September quarter and slashed its profit forecast for the year by 40%.

Pointing in the other direction, SoftBank Corp. (9984.TO) shares rose 4% after the telecom company reported a 44% leap in quarterly profit, helped by strong demand for Apple Inc. (AAPL) iPhones sold by its mobile unit in Japan.

"Clearly the earnings picture is a compelling one, but the lack of clarity in government policy, especially Prime Minister Abe's "Third Arrow" of structural reforms seems to be an inhibitor to foreign investor interest," said CLSA equity strategist Nicholas Smith.

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