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Nikkei Markets

Asian stocks jump as China manufacturing posts surprise gain

Chinese lenders, property developers pace advance

HONG KONG (Nikkei Markets) -- Asian shares jumped Monday, buoyed by two surveys that showed an increase in China's manufacturing activity last month.

The Nikkei Asia300 Index of companies outside Japan climbed 1.1% to 1,335.86. Chinese lenders and property developers were among the biggest contributors to the index's advance. China Vanke rallied 5.8% and China Overseas Land & Investment added 3.9% amid optimism on home prices.

China's average residential property prices are expected to increase by 5% this year, up from the 0.5% forecast in the previous survey in December, a poll by Reuters indicated. Bank of China led lenders higher, rising 3.7%, after reporting a 4.5% increase in net 2018 net profit and a 6.3% growth in net interest income. Agricultural Bank of China closed 2.5% higher following a 5.1% increase in net profit for the same period.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI), released Monday, printed above 50 for the first time in four months to reach its highest since July last year. The gauge rose to 50.8 in February from 49.9 in the previous month, better than the 49.9 reading expected by economists polled by Reuters.

A print above 50 indicates an expansion in activity, while one below that suggests a contraction.

"With a more relaxed financing environment, government efforts to bail out the private sector, and positive progress in Sino-U.S. trade talks, the situation across the manufacturing sector recovered in March," Zhengsheng Zhong, the director of macroeconomic analysis at CEBM Group, said in remarks accompanying the data.

Meanwhile, the official China PMI, released over the weekend, too moved into expansion territory. The official PMI rose to 50.5 in March from 49.2 in the previous month, beating estimates of a 49.5 print.

The official PMI focuses more on large firms, while the Caixin survey concentrates on mid- and small-sized enterprises. There was more positive economic news for the region on Monday, with March PMI's of Japan, Taiwan, Indonesia, Thailand and South Korea indicated an improvement in factory activity on a month-on-month basis.

China's equity index, the Shanghai Composite, climbed 2.6% to reach highest since May 2018. An index of Chinese companies listed in Hong Kong added 1.6%, its best session in nearly a month.

The upbeat China data boosted shares of industrial metal and commodity producers. South Korean steel makers Hyundai Steel and Posco rose at least 4%. Indian zinc miner Vedanta climbed 2.9% and aluminum producer Hindalco Industries rose 5.1%.

Hon Hai Precision Industry surged 9.9% after the Taiwanese iPhone assembler reported net income for the December quarter that topped estimates.

Hong Kong shares of Guangzhou Automobile Group declined 1.1% after reporting a weaker-than-expected December quarter earnings.

China Southern Airlines advanced 3.7% despite saying 2018 profit declined by 51.4% on-year. China Eastern Airlines added 4% though it posted a 57.4% decline in net profit for the same period.

--Nimesh Vora

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