* April manufacturing surveys show recovery remains intact
* Findings bode well for sustained solid global growth in Q2
* China factory growth softens but will expand at good clip
* Emergence of protectionist forces poses risks to trade
By Rajesh Kumar Singh
NEW DELHI, May 2 Factories across much of Asia
got off to a solid start in the second quarter, buoyed by strong
global demand, particularly for hi-tech gadgets which are
leading a sizzling rally in electronics.
Though China's manufacturing growth eased more than expected
in April, business still improved and there were no hints of a
sharp loss of momentum despite risks from a growing regulatory
crackdown and fresh measures to cool its heated housing market.
Indeed, analysts chalked up much of the softening in China
to recent falls in commodities prices, noting its official
factory activity gauge at the weekend was still not far from a
near five-year high.
Globally, continued strength in Asia and expectations for
upbeat PMI readings from Europe later on Tuesday could help
offset a recent soft patch in the U.S. economy, though many
economists believe that weakness will be temporary.
"We expect global growth to pick up in the second quarter,"
said Krystal Tan, Asia economist at Capital Economics in
"Firmer global growth will lend strength to the ongoing
recovery in Asian manufacturing."
After six years of disappointing growth, the world economy
is gaining momentum, fuelled by a cyclical recovery in
manufacturing and buoyant financial markets.
A multi-year trade recession for Asia's exporters has ended
as global demand revives, though the outlook is still being
clouded by worries about growing U.S. protectionism as the new
Trump administration flexes its muscles.
The spring in the air prompted the International Monetary
Fund last month to bump up its 2017 global growth forecast to
3.5 percent from 3.4 percent in January.
The Asian factory surveys pointed to subsiding inflationary
pressures as well as continued economic recovery, giving the
region's central banks scope to keep policy on hold as they wait
for the U.S. Federal Reserve's next move. It is expected to
raise rates again next month.
Australia's central bank held rates steady for a ninth
straight month on Tuesday as it sought to balance the risk of
busting a property bubble against sluggish wage growth. Its next
move is expected to be a rate rise next year.
Even China has started gingerly tightening policy and
clamping down on some types of financing to contain the risks
from years of debt-fuelled stimulus, though analysts expect
policymakers to move cautiously to avoid hurting growth and
rocking the boat ahead of a major leadership transition later
President Xi Jinping made a rare speech last week on
financial stability, calling for increased efforts to ward off
GRADUAL SLOWING SEEN FOR CHINA
While the expansions in China's factory and service sectors
slowed more than expected, analysts were not alarmed, noting
that economic growth had been expected to slowly moderate after
a surprisingly strong start to the year.
Betty Wang, senior China economist at ANZ, said some loss of
steam in the monthly surveys does not portend a growing risk of
a hard landing, noting the government remains supportive of
ample credit for the real economy despite a crackdown in certain
sectors such as real estate, riskier forms of short-term lending
and shadow banking.
China's official Purchasing Managers' Index (PMI) released
at the weekend fell to a six-month low of 51.2 in April from
51.8 in March, but pointed to expansion in the factory sector
for the ninth straight month.
The China Caixin/Markit PMI on Tuesday (PMI) fell to 50.3
from March's 51.2. The Caixin survey focuses more on small and
mid-sized firms, which have been under more stress than their
larger, state-owned peers.
Economists largely attributed the softening in both surveys
to weaker prices for iron ore and other industrial commodities
and to signs of moderation in China's housing market after a
flurry of steps to curb speculation.
Wang at ANZ said many companies had "too strong" a bullish
view when global commodity prices began rallying late last year,
but said that trend is now changing, making firms more cautious
Growth in electronics exports has been one of the highlights
of Asia's export recovery this year, boosting profits for
companies tied into supply chains such as Apple Inc's, which is
gearing up for the launch of the iPhone 8 later this year.
China, Japan, South Korea, Taiwan and Singapore have all
reported stronger shipments in recent months, often led by
electronics. South Korea on Monday reported April exports rose
24.2 percent on-year, the fastest since August 2011.
Global stock market investors are also cashing in on the
so-called electronics "super-cycle".
Samsung Electronics gained as much as 2.0
percent on Tuesday, helping to lift the country's Kospi index
to within reach of its all-time high marked in 2011.
Taiwan Semiconductor Manufacturing Co (TSMC) hit a
record high, rising as much as 2.3 percent.
In other parts of Asia, manufacturing activity hit a
10-month high in Indonesia and expanded for the first time in
two years in Malaysia.
In India, the activity expanded for a fourth consecutive
month in April, helped by stronger growth in new
Japan's manufacturing also expanded at a stronger pace last
month, according to a revised survey on Monday.
(Reporting by Rajesh Kumar Singh; Editing by Kim Coghill)