China and India presented investors with a pleasant surprise on Wednesday – with purchasing managers’ indices showing strongish growth in orders.

But South Korea spoilt the mood with a shock – a 6.6 per cent year-on-year plunge in exports, compared to a decline of under 1 per cent forecast by most economists. The markets took it in their stride, with the MSCI Asia-ex-Japan index trading just 0.5 per cent lower. The impact of the eurozone crisis on Asia is becoming starker by the day: but what is less clear is Asia’s capacity to withstand the pressure and boost domestic demand.

Simon Rabinovitch reported for the FT that the official PMI showed China’s factory activity picked up modestly, although new export orders fell sharply from December and the country’s finance minister said exporters faced “increasing difficulties.”

As Rabinovitch wrote, the PMI inched up to 50.5 in January from the previous reading of 50.3, barely making it above the 50 level that separates expansion from contraction, as the world’s second-largest economy feels the chills from Europe’s debt troubles.

China’s finance minister Xie Xuren said in remarks on Wednesday:”As the external demand is now fading clearly, Chinese exporters are facing increasing difficulties.”

But, investors had been braced for worse: China’s January number was slightly better than had been forecast.

In India too, there is good news from the factory gates. The PMI showed activity growing at its fastest pace in eight months, with a PMI reading of 57.5 in January.

But India is a domestically-oriented economy fairly immune to swings in global trade.

The exporters of east Asia are in a quite different position. In South Korea, with exports dropping like a stone, the PMI was in negative territory for the sixth month in a row at 49.2 – in scale where anything below 50 indicates contracting demand. But at least it was up on December 46.4.

The story was similar in Taiwan, with the index below 50 for the eighth month in succession – at 48.9 in January following 47.1 in December. HSBC said in a note: “Manufacturers in Taiwan are still struggling, but the deterioration of operational conditions is stabilising.”

With January numbers hit by Chinese New Year holidays, economists see scope for a recovery in February. But there is no escaping the influence of Europe. As Bloomberg and Reuters reported, Korean shipments to Europe dropped 44.8 per cent from a year earlier in the first 20 days of January. Shipments to China, the biggest buyer of South Korean goods, increased 7.3 per cent. Exports to the US and Japan rose 23.3 per cent and 37.2 per cent respectively.

But those with money – or access to credit – are enjoying life while they can. As Bloomberg reported, casinos in Macau, the only place in China where they are legal, had a bumper Lunar New Year. Casino revenues in the world’s largest gambling hub jumped 35 per cent in January to 25 billion patacas ($3.13 billion) in January, according to data from Macau’s Gaming Inspection and Coordination Bureau, beating analyst estimates.

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