Singapore, May 31 (BNA): China’s yuan hit a six-month low and Asian stock markets retreated towards a second month of losses on Wednesday as weak factory activity figures provided the latest evidence of a stalled recovery in the world’s second-largest economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2% and fell 2.5% in a month as hopes that a resurgent China would drive global growth faded. Reuters reports that Hong Kong stocks are down 20% from a peak in January.
The data showed that the purchasing managers’ index of manufacturing activity in China fell to 48.2 for the month of May, contracting faster than expected. Services growth slowed to the slowest pace in four months.
The yuan fell 0.3% to 7.1090 per dollar after that – a level not seen since the country went under strict public health restrictions in November last year.
The currency fell more than 2.6% during the month as indicators from production to industrial profits, retail sales and loan growth did not miss expectations.
The disappointment has spilled over into other sensitive assets for China. The Australian dollar hit a seven-month low of $0.6489 and is down four months in a row.
Australian shares are looking forward to their worst day since March, with a monthly decline of 2.7%. It also failed to reach a tourism-led rally for the Thai baht and stock index.
In China, blue chips fell 1% to 2023 lows and government bonds rose. Hong Kong’s Hang Seng fell 2.5%, putting the index more than 20% below the January peak it touched when hopes of reopening were high.
Even stocks in Asia’s brightest market, Japan, fell on Wednesday. The benchmark Nikkei fell 1.6%, though that delivered a monthly gain of 6.8% that pushed the index above 30,000 to its highest level in more than 30 years.
MI