PBOC liquidity move restores some confidence in market
Some analysts are skeptical Thursday’s gains mark a turnaround form the panicked selling a day earlier.
Hong Kong’s Hang Seng Index slipped 0.8%, with the market reopening after a holiday Wednesday.
Japan’s Nikkei Stock Average recovered to trade up 0.1% and Australia’s S&P/ASX 200 was flat. South Korea’s Kospi Composite Index slipped 0.6%.
Smaller stocks helped China’s market rebound Thursday, with a gauge of startup shares in Shenzhen, the ChiNext Price Index , rising more than 4%, after dropping 3% the previous day. The index is one of the most volatile share benchmarks in China.
The central bank’s moves to add liquidity to the market, announced after the market closed Wednesday, has helped restore some confidence, analysts said. The People’s Bank of China said it injected 105.5 billion yuan ($16.6 billion) to 11 financial institutions via medium-term lending facilities–part of its goal to boost liquidity in the banking system and encourage lending to small businesses and the agricultural sector.
Still, some analysts are skeptical Thursday’s gains mark a turnaround form the panicked selling a day earlier.
“The bounce back is only because of the selling yesterday and we think the benchmark will have a difficult time climbing above 3500,” said Jacky Zhang, an analyst at BOC International.
A gauge of Shanghai’s largest 50 stocks fell 0.9%, with state-owned industrial firms like China Communications Construction Co. , down 3.1%, among the biggest losers.
Earlier this week, state-owned Chinese steel trader Sinosteel Co. postponed interest payments due earlier in the week on 2 billion yuan ($315 million) of onshore bonds, the latest sign that Chinese companies are struggling from heavy debt loads.
“If we start seeing the equity market acting violently negative again, you may well see some risky assets…come back under pressure,” said Chris Weston, a market strategist at brokerage IG. Volatility in China’s markets over the summer pressured many commodities and emerging-market currencies.
As of Wednesday’s close, the MSCI Asia Pacific Index was down 1.2% for the week, after three straight weeks of gains. The decline marks a reversal from the past few weeks, when hopes for a delay in higher U.S. interest rates and expectations of central-bank stimulus from Tokyo to Beijing fueled stock gains.
China’s economic backdrop remains a concern for investors. While the country grew at its slowest pace during the third quarter since 2009, authorities still haven’t given clear signs on whether they will introduce further stimulus. Policy makers meet in Beijing later this month for an annual economic planning meeting.
Investors also are looking ahead to an European Central Bank meeting later Thursday to see whether the bank will expand its €60 billion ($68 billion) a month bond-buying program, known as quantitative easing.
The U.S. dollar was flat in early Asia trade at ¥119.87 Japanese yen.
In the U.S., health-care shares capped a volatile session with losses after a negative report about Canadian drug maker Valent Pharmaceuticals International .
Prices for brent crude oil were up 0.5% at $48.11 a barrel. U.S. crude-oil prices fell 2.4% in overnight, as U.S. stockpiles surged.
Gold prices were down 0.1% at $1,165.70 an ounce.
China shares recovered Thursday from a sudden selloff
in the previous session, though investors remain wary of weakness in the
world’s No. 2 economy.
The Shanghai Composite Index climbed in the morning to trade up 0.2%
at 3328.49 after wavering between gains and losses earlier in the day.
The benchmark lost 3% on Wednesday.Hong Kong’s Hang Seng Index slipped 0.8%, with the market reopening after a holiday Wednesday.
Japan’s Nikkei Stock Average recovered to trade up 0.1% and Australia’s S&P/ASX 200 was flat. South Korea’s Kospi Composite Index slipped 0.6%.
Smaller stocks helped China’s market rebound Thursday, with a gauge of startup shares in Shenzhen, the ChiNext Price Index , rising more than 4%, after dropping 3% the previous day. The index is one of the most volatile share benchmarks in China.
The central bank’s moves to add liquidity to the market, announced after the market closed Wednesday, has helped restore some confidence, analysts said. The People’s Bank of China said it injected 105.5 billion yuan ($16.6 billion) to 11 financial institutions via medium-term lending facilities–part of its goal to boost liquidity in the banking system and encourage lending to small businesses and the agricultural sector.
‘The bounce back is only because of the selling yesterday and we think the benchmark will have a difficult time climbing above 3500.’Jacky Zhang, BOC International
Still, some analysts are skeptical Thursday’s gains mark a turnaround form the panicked selling a day earlier.
“The bounce back is only because of the selling yesterday and we think the benchmark will have a difficult time climbing above 3500,” said Jacky Zhang, an analyst at BOC International.
A gauge of Shanghai’s largest 50 stocks fell 0.9%, with state-owned industrial firms like China Communications Construction Co. , down 3.1%, among the biggest losers.
Earlier this week, state-owned Chinese steel trader Sinosteel Co. postponed interest payments due earlier in the week on 2 billion yuan ($315 million) of onshore bonds, the latest sign that Chinese companies are struggling from heavy debt loads.
“If we start seeing the equity market acting violently negative again, you may well see some risky assets…come back under pressure,” said Chris Weston, a market strategist at brokerage IG. Volatility in China’s markets over the summer pressured many commodities and emerging-market currencies.
As of Wednesday’s close, the MSCI Asia Pacific Index was down 1.2% for the week, after three straight weeks of gains. The decline marks a reversal from the past few weeks, when hopes for a delay in higher U.S. interest rates and expectations of central-bank stimulus from Tokyo to Beijing fueled stock gains.
China’s economic backdrop remains a concern for investors. While the country grew at its slowest pace during the third quarter since 2009, authorities still haven’t given clear signs on whether they will introduce further stimulus. Policy makers meet in Beijing later this month for an annual economic planning meeting.
Investors also are looking ahead to an European Central Bank meeting later Thursday to see whether the bank will expand its €60 billion ($68 billion) a month bond-buying program, known as quantitative easing.
The U.S. dollar was flat in early Asia trade at ¥119.87 Japanese yen.
In the U.S., health-care shares capped a volatile session with losses after a negative report about Canadian drug maker Valent Pharmaceuticals International .
Prices for brent crude oil were up 0.5% at $48.11 a barrel. U.S. crude-oil prices fell 2.4% in overnight, as U.S. stockpiles surged.
Gold prices were down 0.1% at $1,165.70 an ounce.
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