Asian Equities Trying to Rally Despite China’s Retreat

Most Asian share markets followed Wall Street higher on Monday, though investors were wary of being disappointed yet again by economic data from China and policy stimulus in the euro zone.  Adding to the air of caution was a retreat in Chinese equities, in part on news the securities regulator had barred three major brokerages from opening new margin trading accounts for clients for three months.

An explosion in margin trading is one reason China stocks soared in recent months and shares in the brokers opened sharply lower. The Shanghai market shed 3.9 percent, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen slid 4.2 percent.  Markets elsewhere in the region were generally firmer, with Australia’s main index up 0.9 percent and Japan’s Nikkei rising 0.6 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4 percent to probe six-week highs.  Not so positive was Sunday data showing Chinese new home prices in December fell an average 4.3 percent year-on-year in 68 of the 70 major cities monitored. Though property sales volumes picked up, massive inventories of unsold homes were expected to keep pressure on the sector and the economy well into 2015.


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