Most Asian markets extend gains


Hong Kong continues to underperform
Chief Investment Office11 Oct 2017
Photo credit: AFP Photo


CHINA & HONG KONG 

Chinese equities extended gains on Tuesday (10 October). The benchmark Shanghai Composite Index added 0.76% to 3,374.38, the smaller Shenzhen Composite Index increased 1.30% to 2,014.43, and the blue-chip CSI 300 Index climbed 1.19% to 3,882.21.

People’s Bank of China (PBOC) Governor Zhou Xiaochuan made a fresh call to open up the nation’s financial sector, and warned that reform will become more difficult if the window of opportunity is missed.

In an interview the nation’s longest-serving central bank chief defined a “troika” of three drivers needed to further open up the economy, citing greater foreign trade and investment, a more market-based foreign-exchange rate mechanism with a “reasonable and balanced” yuan rate, and the relaxation of capital controls to allow use of the yuan to be gradually freed.

Stocks in Hong Kong continued to underperform, as a broad-based decline continued to weigh on the overall index. The Hang Seng Index lost 0.46% to 28,326.59 and the Hang Seng China Enterprises Index slipped 0.64% to 11,385.38.

A long-awaited system that will allow regulators to take a closer look at who is trading mainland-listed stocks from Hong Kong will start in the middle of next year, according to the city’s top securities regulator. Current rules only identify the brokers in Hong Kong who execute trades in Shanghai and Shenzhen. As the mainland and Hong Kong markets integrate more closely through a series of trading links, their respective regulators are also looking at ways to bring market surveillance more in line with each other. Mainland authorities can see which individuals have put in the orders when they’re sent domestically. – Bloomberg News.

 

REST OF ASIA

Shares in Sydney added 0.55% in Wednesday (11 October) early trading, to 5,770.10 as investors’ risk appetite return amid dissipating Spain political tension. The S&P/ASX 200 Index closed on Tuesday (10 October) 0.50% higher at 5,739.26.

More global fund managers are setting up shop in Australia, drawn to the nation’s AUD2.3t (USD1.8t) pension savings pool and new local investment opportunities. The developments are part of a broader global trend as low interest rates in North America, Europe and Asia prompt money managers to increasingly seek assets they had previously seen as too risky. There are also uniquely Australian factors. The world’s fourth-largest pension pool is swelling due to mandatory retirement saving rules. Many Aussie funds have little choice but to seek overseas investments as well as alternative assets as they outgrow local equity and corporate bond markets. – Bloomberg News.

South Korean stocks advanced 0.41% to 2,443.69 on Wednesday morning encouraged by the climb seen in the overnight market. The Kospi Index gained 0.90% to 2,394.47 on Tuesday.

President Moon Jae-in and his deputies have met with overseas money managers to change perceptions that Korean markets may be rigged to favor the nation’s family-run conglomerates, Fair Trade Commission Chairman Kim Sang-jo said during an interview in Seoul. Some of those meetings were held by Moon during a recent trip to the US.

The meetings are part of a broader government effort to take on the dynasties that have fended off foreign activists and dominated Korea’s economy for decades. Moon’s plan also includes giving the nation’s USD530b pension fund a greater say at shareholder meetings of companies it invests in. – Bloomberg News.

Taiwan’s stock exchange was closed on 10 October to for a public holiday.

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