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* Chinese private PMI falls but remains at a high level
* Factory activity increases in Japan, South Korea, Taiwan
* Tighter COVID-19 Control Extends Asia’s Recovery Outlook From Cloud
* Modest recoveries contrast with stellar stock market performance (adds Indian PMI, analyst quotes and background on divergence between economy, asset prices)
TOKYO, Jan.4 (Reuters) – Activity at Asian factories rose moderately in December on strong demand from the regional Chinese giant, business surveys showed Monday, but the prospect of more severe coronavirus downturns clouded the outlook for the sector in recovery.
Manufacturing activity has grown in Japan, South Korea and Taiwan, according to PMI surveys, the latest indication that manufacturers in the region continue to rebound from damage from the COVID-19 pandemic last year .
But a slowdown in the growth of factory activity in China underscores the challenges the region faces, as increasing cases around the world force many countries to reimpose the brakes on economic activity, clouding the outlook for economic activity. ‘export.
China’s Caixin / Markit Manufacturing Purchasing Managers Index (PMI) fell in December to 53.0 – its lowest level in three months – but remained well above the 50 level that separates growth of the contraction.
“External demand has likely been affected by the continued global spread of COVID-19 and the reimplementation of lockdowns,” Chinese HSBC economist Erin Xin said in a research note.
The reading, which was below the 54.9 in November, fell roughly in line with the official measure of plant activity which showed moderate to high activity.
Elsewhere in the region, production stabilized in Japan for the first time in two years, while India’s industrial sector ended 2020 on a stronger note as manufacturers increased production to meet demand. growing.
The final PMI at Jibun Bank Japan fell to seasonally adjusted 50.0 in December from 49.0 the previous month, ending a series of record 19-month declines.
“Japanese manufacturers have reported a broad stabilization in operating conditions at the end of a tumultuous year,” said Usamah Bhatti, economist at IHS Markit.
“HUGE DIVERGENCE”
The modest improvements in manufacturing contrasted with the sharp rises in stock prices, which some analysts said have benefited from a strong global monetary stimulus but are not justified by the continued weakness in many economies.
Japan’s Nikkei average ended 2020 up 66% from the year-low in March, even as the world’s third-largest economy suffered a deep recession from the COVID-19 hit.
A slowdown in trading activity in the United States in mid-December did little to stop a surge in stocks that pushed the S&P 500 index up more than 16% last year.
“We are seeing a huge divergence between the dismal state of the economy and the growth of the stock markets, as investors are assessing at the best of times where vaccines will help contain the pandemic this year,” said Izuru Kato, economist. chief at Totan Research in Tokyo.
“Things might not be as bullish as investors think, which means asset prices could already bubble. But right now, investors have little choice but to ride the wave. “
China’s industrial sector has seen an impressive recovery from the coronavirus shock thanks to surprisingly strong exports, helping to brighten the outlook for recovery in Asia.
But an upsurge in infections is forcing some Western countries to re-impose strict controls on economic activity, clouding the outlook for exports, including that of China.
Japan could join other countries in enforcing tighter restrictions, with Prime Minister Yoshihide Suga on Monday signaling the possibility of declaring a state of emergency for Tokyo and three surrounding prefectures. (Reporting by Leika Kihara; Editing by Ana Nicolaci da Costa)
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