Overnight, Wall Street chalked up a three-day losing streak, with the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) closing about half a percent lower for the year, on the back of lackluster earnings from index majors such as 3M (NYSE: MMM) and Caterpillar (NYSE: CAT). The S&P 500 (INDEX: .SPX) lost 0.6 percent, while the tech-heavy Nasdaq (NASDAQ: .IXIC) closed down 0.5 percent.
Mainland indices mixed
China's benchmark Shanghai Composite index notched up 1.3 percent, staying on course to extend a six-session winning streak, even as the preliminary China Caixin PMI fell to 48.2, well below the 49.7 forecast from a Reuters poll and the 50-mark separating growth from contraction. The data also marked a 15-month low.
The closely-watched PMI takes on a new sponsor after HSBC's five-year contract came to an end. Chinese media group Caixin, which focuses on business news, will brand the China data, saying it was part of a strategy to increase its financial information offerings.
Analysts attribute gains to the usual mantra of "bad news is good news." "Negative PMI numbers will [prompt] Beijing to print more money to stimulate economic activity," said Frank Holmes, CEO & chief investment officer at U.S. Global Investors.
Other analysts say policy support has stabilized the A-share market, therefore insulating it from weak economic data.
"When [authorities] encourage investors to buy, they've set a ceiling... the government has been buying stocks so people are feeling much better now, meaning the A-share market has stabilized," Raymond Jook, managing director at Avant Capital Management, told CNBC's "Street Signs Asia." "But Hong Kong is a free market; bad numbers will lead investors to dump shares."
AIA Group (Hong Kong Stock Exchange: 1299-HK), the world's second-largest life insurer by market capitalization, doubled losses to 1.3 percent despite reporting a 21 percent rise in the value of new business for the first half of the year, driven by strong sales in Hong Kong and China.
Gaming plays continued to outperform; Sands China (Hong Kong Stock Exchange: 1928-HK) rallied more than 2 percent, adding to Thursday's 7 percent jump, on the back of better-than-expected quarterly revenue. Galaxy Entertainment (Hong Kong Stock Exchange: 27-HK) and SJM Holdings (Hong Kong Stock Exchange: 880-HK) bumped up 0.7 and 0.2 percent, respectively.
Nikkei eases 0.6%
Japan's Nikkei 225 (CBOE: .NKXQ) tracked the negative leads beyond Asia to reverse Thursday's gains.
Losses in the index heavyweights weighed on the bourse; Fast Retailing (Tokyo Stock Exchange: 9983.T-JP) lost 1.6 percent from the get-go, while Fanuc (Tokyo Stock Exchange: 6954.T-JP) and Softbank (Tokyo Stock Exchange: 9984.T-JP) receded more than 1 percent each. Softbank, the telecom and internet investor, is gearing up for dollar and euro-bond issuances, according to a report by theNikkei business daily on Thursday.
Major exporters turned negative as the yen bounces into the 123 territory against the U.S. dollar. Toyota Motor (Tokyo Stock Exchange: 7203.T-JP) slipped 0.2 percent, while Sony (Tokyo Stock Exchange: 6758.T-JP) and Toshiba (Tokyo Stock Exchange: 6502.T-JP) shaved off 0.2 and 0.9 percent, respectively.
Meanwhile, the International Monetary Fund warned Japan that it needs to step up on reforms or risk slowing growth, "stagflation" and turmoil in financial markets, economists wrote in their annual assessment of the world's third-biggest economy.
ASX sags 0.3%
Australia's S&P ASX 200 (ASX: .AXJO) index narrowed losses after sentiment nosedived following poor data from its biggest trading partner - China. The Australian dollar (Exchange: AUD=) plummeted more than 1 percent to $0.7275 against the greenback - its lowest level since May 2009.
Among laggards, Evolution Mining (ASX: EVN-AU) and Newcrest Mining (ASX: NCM-AU) tumbled 7.9 and 5.8 percent, respectively, while Alacer Gold (Toronto Stock Exchange: ASR-CA) retreated 4 percent as the fall in gold prices see no signs of abating.
Market bellwether BHP Billiton (London Stock Exchange: BLT-GB) and Rio Tinto (ASX: RIO-AU) remained downbeat, with losses of 1.4 and 1 percent, respectively.
Macquarie Group (ASX: MQG-AU) underperformed financials to tank 3.5 percent after the management said it will look to raise equity for potential acquisitions at its annual general meeting on Thursday.
Kospi drops 0.9%
South Korea's Kospi index dropped to its lowest level in nearly two weeks; the won (Exchange: KRW=) erased earlier gains to turn weaker against the dollar following data on China's factory activity. The currency last traded at a three-year low of 1,167.
Companies with exposure to China sold off; Samsung Electronics (Korea Stock Exchange: 593-KR) slipped 0.7 percent, while Daewoo Shipbuilding & Marine Engineering and AmorePacific (Korea Stock Exchange: 9043-KR) lost 4.3 and 1 percent, respectively.
Corporate earnings dominated investors' attention; Hyundai Motor (Korea Stock Exchange: 538-KR) charged up 0.7 percent, recovering from dampened sentiment due to a 23.8 percent plunge in second-quarter net profit from a year earlier.
Kia Motors (Korea Stock Exchange: 27-KR) eased 0.7 percent after announcing a 27 percent fall in net profit for the June quarter.
