China equities slip on US sanctions

Equities ease in Asia after a mixed session on Wall Street

The short-term FOMO herd continued chasing its tail in New York overnight, as they have been doing all week. Yesterday it was the turn of Covid-19 to doom the world again. Interestingly the herd chose a new strategy, sell traditional stocks and hedge via big-tech. That saw the S&P 500 fall 0.58%, the Dow Jones fall 1.38%, and the Nasdaq rose by 0.53%.

With Wall Street’s messages mixed and no headline or data to sink its teeth into, Asia has chosen to lighten positioning or sit on its hands today. The Nikkei 225 has fallen 0.30% with the Kospi down 0.80% after the apparent suicide of the Seoul Mayor, a potential Presidential candidate.

The announcement of new US sanctions on China tech companies, and officials associated with repression of China’s minorities, has seen a dose of reality hit the mainland today. The Shanghai Composite and CSI 300 are down 1.70%, highlighting the perils of central government hijacking the pink tip-sheets. The Hang Seng has fallen 1.0% in sympathy.

Elsewhere, Singapore is closed with Kuala Lumpur and Jakarta flat on the day. It is also a quiet day in Australia with the ASX 200 and All Ordinaries easing by 0.20%, with China relations and Victoria State’s self-isolation hanging over local markets.

The move lower in mainland stocks reflects the domination of fast-money retail investors in those markets. That partly explains why the fall in China has not been reflected elsewhere across the region. Having told everybody to get long though, I suspect the Chinese government does not want a one-week bull market on its hands. Expect more exhortations from them to build their wealth and do their duty for the country.

Elsewhere, European and US stock markets are likely to bank a quiet end to the week, with range trading set to continue until next week.

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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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