Asian equities are non-descript

It looks to be a reasonably neutral day in Asia, with US Inflation data coming in on forecasts and failing to provide any directional momentum for Asia. The exception is Mainland China, where markets are lower as Bloomberg reports that the insurance industry may be the next one in Xi Jinping’s crosshairs. They also reported that overnight, China’s State Council and Communist Party Central Committee jointly released a document outlining a five-year plan to increase supervision of key industries.

 

With China’s regulatory crackdown now seemingly set for years ahead, Mainland equities have retreated, but not markedly so, hinting that investors are being more accepting of the “new normal.” The Shanghai Composite is 0.15% lower, but once again, the CSI 300 has retreated by 0.60%, with Hong Kong unchanged. Although regulatory threats have had a modest impact today, the lesson seems to be that gains in China stock will be limited for some time because of them. I doubt the cheapness of price to governmental risks ratio for China equities has finished its repricing exercise lower yet.

 

Elsewhere, Wall Street had a mixed night, with rotation into growth evident again after US inflation data passed without incident. The S&P 500 rose 0.25%, while the Nasdaq fell by 0.16%, with the Dow Jones once again outperf0orming, rising by 0.63%. In Asia, US futures are basically unchanged.

 

That has left Asia drifting with the Nikkei 225 and Kospi unchanged for the session. Taipei has edged 0.15% lower, with Singapore rising by 0.30% and Kuala Lumpur unchanged. Jakarta has risen 0.55%, while Bangkok has retreated by 0.55%, with Manila slumping 1.15% ahead of the BSP policy decision. Australia’s ASX 200 and All Ordinaries are unchanged.

 

With Asia caught between delta-variant and China regulatory risks on one side and a US economy still on its recovery track on the other, Europe is likely to open neutral to slightly higher. This evening, it would be a huge surprise if the US data stopped the party early for US equities.

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
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is 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, Channel News Asia as well as in leading print publications including 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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