In Asia ex-Japan, a rally in Australian banks and Hong Kong developers helped lift stocks higher. Minutes of the Federal Reserve Bank of Australia August meeting fueled speculation that policymakers will not hike rates, rallying banks shares. The minutes also said banks’ loan losses seem to have peaked. In Hong Kong a successful government land sale sent developers higher. In Japan however, stocks remained under pressure on concern about Japanese growth. (See RGE Critical Issue: Japan Stuck in Transition: GDP Growth of 0.4% y/y in Q2).
The MSCI Asia Pacific Index gained 0.2% to 118 led by Australian banks. The MSCI ASIA APEX 50 rose 0.2% to 749.
In Japan stocks fell on growing concern over Japanese growth. The Nikkei 225 declined 0.4% to 9,162. Toyota fell 0.7% while Tokyo Electron declined 1.7% as the yen strengthens. (See RGE Critical Issue: Will Japan Intervene to Weaken the Yen?).
In Hong Kong, the Hang Seng Composite rose 0.1% to 21,137. Developers led the rally after government land sales beat estimates. Cheung Kong advanced 1.1% while Sino Land surged 3.6%. (See RGE Critical Issue: Can Hong Kong’s Government Prevent a Property Bubble?).
In mainland China, the Shanghai SE Composite advanced 0.4% to 2,672 led by consumer goods and industrials after China’s leading indicator gained 0.8% in June. Sany Heavy surged 6.7%. FDI rose 29.2% in July.
In India, most stocks declined led by exporters. The BSE SENSEX 30 was unchanged at 18,049.
In Australia, the S&P/ASX 200 index rose 0.9% while in Korea; the KRX 100 advanced 0.6% to 3,676.
On currencies the yen led a decline in Asian currencies, falling 0.05% to 85.41. The Aussie dollar lost 0.14% while the New Zealand Kiwi fell 0.41%.
Sovereign bonds advanced across the region except in India with the 10-year yield in Hong Kong down 2.1 bps. The yield on the 10-year JGB fell 0.9 bps to 0.946%. Sovereign CDS spreads also narrowed except in Hong Kong and New Zealand. Corporate spreads narrowed in Asia ex-Japan and widened in Japan.
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