Dip buyers hunt for China equities

Asia in mixed territory after Wall Street surges

Another day, another record close for Wall Street, as strong corporate earnings and subdued US yields keeps the party going. The S&P 500 rose 0.82%, the Nasdaq climbed 0.55%, while the Dow Jones finished a respectable 0.80% higher. Delta nerves have been pushed to the sidelines once again, and the US Infrastructure Bill continues to make progress, it seems.

In Asia, it has been a mixed day notable for the dip-buyers in China equities. After yesterday’s “spiritual opium” comments from the government press and a new enquiry into auto semiconductors sparked a panicked sell-off in tech heavyweights, the irresistible lure of seemingly cheap China shares has buyers back once again. The Shanghai Composite has risen 0.75%, with the CSI 300 climbing 0.65%. The tail-chasing herd have lifted the Hang Seng by 1.15%. Today’s bargain is tomorrow’s expensive mistake with China at the moment, and the rebalancing between price and regulatory risk still has some way to go, I believe.

Japan’s worsening Covid-19 outlook is weighing on the Nikkei 225 today, which is 0.25% lower, but the Kospi has leapt by 1.15%, with Taipei climbing 0.40%. Singapore has risen by 1.0%, boosted by excellent results from banking heavyweights UOB and OCBC. The Singapore banking sector has long been a favourite, with well run, well-capitalised and digitally savvy incumbents that are well-placed to benefit from both Singapore and the region’s recovery, even if it is slower than hoped. A Singapore Airlines A380 filmed lifting off from desert storage to return home sees the share price 1.40% higher today in the hopes of better times ahead.

Elsewhere, Covid-19 and political turmoil see Kuala Lumpur falling 0.80%, with Malaysia one of my fragile four. Until one of those things changes materially to the positive side, it shall remain there. Jakarta has risen by 0.30%, while Bangkok has eased by 0.40%, with Manila climbing 0.40% and quietly outperforming this week. Australian markets have followed Wall Street higher, as is their want, although the ongoing Covid-19 situation is tempering the bulls. The ASX 200 and All Ordinaries are finishing the day 0.35% higher.

European stock markets should take their cues once again from Wall Street to open higher shortly.

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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