(Bloomberg) – So much to start the new year on the right foot.
The benchmark for the Asia-Pacific shares outside of Japan fell to 1[ads1].7 percent at 14:54. in Hong Kong traders returned to jobs in key regions, including Hong Kong, China, Taiwan and Korea. Japan markets are closed and reopened on January 4.
Wednesday's plunge, which is the worst start of the year of three, has a culprit: China's factory conditions declined in December. To be precise, Caixin Media and IHS Markit PMI fell to 49.7 from 50.2, the lowest reading since May 2017.
"Asian markets took a deep dive into negative territory following a disappointing China Caixin production PMI reading, "said Margaret Yang, market analyst at CMC Markets, in a note to clients. "China's production PMI is falling at a pace faster than the economists' forecast, suggesting a global economic downturn and trade war is damaging the country's production activities."
It sent several key stock meters across Asia down Wednesday:
Hong Kong's Hang Seng index stumbled 2.8 percent, ready for the biggest downturn for more than two months. Shanghai-Shenzhen CSI 300 index fell 1.4 percent, on track for its lowest close since March 2016Benchmarks in Taiwan and Korea dropped by at least 1.5 percent to speak short, day rallies Australia's S & P / ASX 200 lost so much like 1.7 percent US. stock index futures, which rose before China data came through, deleted these gains and dropped as much as 1.1 percent
Click here to read about the rough 2018 that deleted $ 5 trillion from Asia stocks
This is Not the first country to report deteriorating factory conditions over the region's export-heavy economies with supply chains more closely interwoven than ever. Taiwan, Malaysia, Vietnam, the Philippines and South Korea were hit by the trade war between the United States and China and a dizzying technological boom. Earlier Wednesday, Singapore's economic growth increased to an annual 1.6 percent in the fourth quarter, and house prices fell for the first time in six quarters.
This year "is going to be a challenging year for everyone, not just China but also globally," says Yang in an interview with Bloomberg TV. "We're probably off the top of a cyclical upswing," with factory conditions also slowing down. European countries, she said.
Cliff Tan, MUFG Bank Ltd. East Asian leader of global markets research, proposes to keep the "powder quite dry" to at least the end of the first quarter as investor "nervousness" is likely to Jitters reflects primarily revenue revisions that have not yet settled, he added.
"With the Fed probably unsecured on what it needs to do at interest rates, I don't see how people can be too sure All in all," said Tan.
Focus on developed markets
While Asian stocks led market waste last year and appear to pick up where they left off, there are developed markets that will be under the microscope in 2019, especially as Democrats To take over the house at the congress, Clive McDonnell, head of the equity strategy at Standard Chartered Private Bank in Singapore, said.
"There are fairly developed markets that are under a little more pressure, to the extent that Asia markets fell last year," McDonnell said. This trend emerged in December when it was the United States that ran into disadvantages in markets, he added.
"The overly pessimistic view that investors have adopted is likely to soften in January," said Kerry Craig, Melbourne-based global market strategist at JPMorgan Asset Management. "Given that a weaker global growth outlook, and in my opinion misplaced recession, is at the heart of this perception, until we see a stabilization or improvement in the economic data of the major economies, China, the United States and the eurozone, markets may have a tough time. "
Craig suggests that a balanced portfolio of stocks and bonds will yield returns this year, which may be an improvement over 2018.
" For investors who can see past the end of this cycle and through to the next, they are willing to stomach the volatility of the long-term return potential, he said.
Martin Lakos, division director of the Macquarie Group's value creation division, says investors are well aware of and understand where the increased volatility came from. "Two very distinct periods "of market self-sufficiency are the causes of the increased turbulence this year: the lack of volatility for 15 months after US president Donal d Trump was selected and then relieved by the choppy after the global route in February.  History continues
"And when you put it into perspective for clients, they understand to some extent where this volatility is generated because we probably go back to more normal volatility levels," Lakos said.
For the leader of Asia equity strategy at Societe Generale, do not buy the dip yet. Frank Benzimra said that while stock values are becoming increasingly attractive, especially in China, it is still too early to start buying.
"We stand by our 2019 Asia equity outlook: too early to add risk. The good news, for Asia assets and beyond, is that we start the year with lower valuation than a year ago," he said.
– With help from Abhishek Vishnoi, Livia Yap and Matthew Burgess.
To contact the reporter on this story: Eric Lam in Hong Kong at email@example.com
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