Asian stocks down on weak China data, auto shares sell-off

SEOUL, South Korea, Sept 23: Asian stock markets declined Wednesday as a global sell-off given impetus by the Volkswagen emissions scandal was exacerbated by weak Chinese factory data.

KEEPING SCORE: Hong Kong's Hang Seng sank 2 percent to 21,355.85 and South Korea's Kospi was 0.8 percent lower at 1,967.01. China's Shanghai Composite Index fell 1.3 percent to 3,144.96 and Australia's S&P/ASX 200 dropped 1.1 percent to 5,049.50. Stocks in Southeast Asia were also lower. Japan's stock market is closed until Thursday for public holidays.


CHINA DATA: The preliminary Caixin/Markit manufacturing index based on a survey of factory purchasing managers fell to 47.0 this month, the lowest level in six and a half years. Based on a 100-point scale, numbers above 50 indicate expansion. The survey showed that China's manufacturing slump has deepened, with faster contraction in factory output, export orders, overall new orders and employment.

AUTO SLUMP: Shares of Asian automakers slumped on Wednesday, erasing gains from the previous session that appeared to stem from expectations they will expand market share after Volkswagen's emissions scandal. Volkswagen's stock price nosedived more than 30 percent in two days after it admitted cheating the emissions testing affecting half a million cars sold in the U.S. On Tuesday, the world's top-selling carmaker said some 11 million of its diesel vehicles worldwide were fitted with software that defeated U.S. emission tests. In Seoul, shares of Hyundai Motor Co. sank about 3 percent and its smaller affiliate Kia Motors Corp. was down nearly 3 percent.

ANALYST'S TAKE: Volkswagen news "spooked investors to take a step back on auto equities," said Bernard Aw, a market strategist at IG in Singapore. "This coupled with flimsy market sentiments made for an explosive cocktail of risk selling," he said. "Nonetheless, market participants are still wrapping their heads around the timing of the Fed rate hike. The implied probability from the Fed fund rate futures market eased to 41 percent yesterday from 49 percent on Monday, which could be due to the risk-off mood."

WALL STREET: Another bout of turbulence swung the U.S. stock market to a loss Tuesday. The Standard & Poor's 500 dropped 24.23 points, or 1.2 percent, to 1,942.74. The Dow Jones industrial average fell 179.72 points, or 1.1 percent, to 16,330.47, and the Nasdaq composite declined 72.73 points, or 1.5 percent, to 4,756.72.

ENERGY: Benchmark U.S. crude oil was down 11 cents at $46.25 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 85 cents to close at $45.83 a barrel in New York. Brent Crude, an international benchmark, lost 23 cents at $49.64 a barrel in London.

CURRENCIES: The U.S. dollar weakened to 119.87 yen from 120.01 yen. The euro fell to $1.1126 from $1.1134.

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