China equities outperform on yuan fall

China equities boosted by easing of investment rules

In an otherwise quiet start to the week, Chinese equities have exploded higher this morning. Mainland stocks were boosted by the easing of foreign investment restrictions in Shenzhen tech companies. Mostly, the rally appears to be driven by the change in policy by the PBOC over the weekend, making it easier to sell yuan. The yuan’s fall today has been mirrored by a jump in the Shanghai Composite and CSI 300, which are both 1.85% higher. Hong Kong has coat-tailed the rally, rising 1.50% today.

The rest of Asia is more subdued after the US ended the week positively on fiscal stimulus hopes. Wary of US presidential tweet risk, Asia/Pacific markets are mostly slightly in the green. The exception is Japan, where a strengthening yen, poor new machinery orders, and North Korea’s unveiling of new weaponry over the weekend have pushed the Nikkei 0.45% lower.

In Asia this week, uncertainty has returned to Malaysian politics, (did it ever go away?), with opposition leader Anwar Ibrahim to meet with the Malaysian King tomorrow, to prove that he has a sufficient majority in parliament. That possibility, and the range of possible responses available to the King, will mute sentiment in Malaysia for the first part of the week at least. Malaysia has sunk 0.95% on political uncertainty, while Australia’s leading indices are flat on the day. Elsewhere the Kospi has risen 0.50%, Singapore is up 0.40% with Jakarta up 0.70% after Jakarta’s Covid-19 restrictions were eased.

Overall, the picture, China aside, is one of Asia content to follow New York’s move higher cautiously. That is in keeping with the pattern of trading last week where Asia, wary of headline risk, followed but didn’t fully commit to the exuberance of US markets. That pattern is likely to continue this week.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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