Asian ُStocks Firm After Wall Street Rout, But Omicron Risks Loom

Asian shares advanced on Tuesday, shrugging off a bruising Wall Street session, as Chinese markets cheered Beijing’s move to help troubled property firms, although surging cases of the Omicron coronavirus variant remain a worry for investors.

U.S. stock indexes retreated more than 1% as positive COVID-19 case counts rose and President Joe Biden’s social spending and climate bill hit a significant setback. read more

The negative mood brightened somewhat in Asian hours with European and U.S. stock futures up and some assets battered in Monday’s selling finding buyers, although volumes were thin heading into year-end holidays.

European markets appeared set for a higher open with the pan-region Euro Stoxx 50 futures up 1.1%. German DAX futures rose 0.93% while London’s FTSE futures added 1.02%. U.S. stock futures, the S&P 500 e-minis , were up 0.72%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) climbed 0.81% after declining on Monday to the lowest in a year. Japan’s Nikkei (.N225) rose 2% after two sessions of decline with chip-related Tokyo Electron (8035.T) and Advantest leading the pack, as investors bought into Monday’s heavy selloff. Australian stocks (.AXJO) were up 0.9%.

While the widespread selling in global shares appeared to have eased, investors are still concerned about Omicron risks. “COVID remains a threat to the global economy. Initial evidence suggests the Omicron variant is more transmissible but results in less severe illness compared to previous variants,” economists at CBA wrote in a note.

Elsewhere in Asia, China and Hong Kong equities rose on Tuesday, with real estate stocks extending their rebound. China’s blue-chip CSI300 index (.CSI300) was 0.45% higher while the Shanghai Composite Index (.SSEC) rose 0.67%. Hong Kong’s Hang Seng index (.HIS) added 0.58%.

The moves higher come as Beijing reportedly urged large private and state-owned property companies to acquire real estate projects from troubled developers to reduce risks that mounting debt piles will destabilise the economy. read more

“Chinese regulators’ encouragement for such acquisitions would help troubled developers ease their debt pressure and improve the current operating conditions of the whole real estate industry,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.

“Thanks to the latest signs of government support, sentiment in the sector has been boosted. That’s why we are seeing real estate companies and other relevant sectors rising in mainland China and Hong Kong today.”

However, China’s video and live-streaming platforms listed in Hong Kong such as Bilibili (9626.HK) and Kuaishou Technology (1024.HK) slumped, after Beijing fined China’s “queen of livestreaming” Viya for tax evasion, stoking fears of fresh crackdowns. read more

On Monday, the Dow Jones Industrial Average (.DJI) fell 1.23%, the S&P 500 <.SPX lost> 1.14% and the Nasdaq Composite (.IXIC) dropped 1.24%.

Europe’s main indexes also sold off after British Prime Minister Boris Johnson said he would tighten coronavirus curbs if needed, after the Netherlands began a fourth lockdown and others in the region considered Christmas restrictions. read more

The dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was down at 96.493. The yield on benchmark 10-year Treasury notes rose to 1.4259% compared with its U.S. close of 1.419% on Monday. The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 0.636% compared with a U.S. close of 0.63%.Oil prices started to recover from concerns the spread of the Omicron variant would crimp demand for fuel and signs of improving supply. U.S. crude ticked up 1.31% to $69.51 a barrel. Brent crude rose to $72.25 per barrel. Gold was slightly higher. Spot gold was traded at $1,792.01 per ounce.

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Source: Asian stocks firm after Wall Street rout, but Omicron risks loom | Reuters

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Japanese Stockmarket Enjoys a Suga Rush As PM Steps Down

The Japanese stock market has hit a 30-year high following the resignation of prime minister Yoshihide Suga.

Japanese stocks have hit a 30-year high following the resignation of prime minister Yoshihide Suga. Suga, who has only been in office for a year, had become widely unpopular as his government failed to get on top of a surge in Covid-19 infections. A slow vaccine rollout and the controversial decision to go ahead with hosting the Olympics despite the pandemic also sapped his support. He will step down before a general election scheduled for later this year. 

Japan’s Topix index reacted to the news by hitting its highest level since April 1991, says Bloomberg. Investors had once had high hopes for Suga, who vowed to accelerate Japan’s digital shift (see also page 28). In February this year the Nikkei 225 index hit the symbolic 30,000-level for the first time since 1990. Yet it fell back as Covid-19 came to dominate his premiership: “Suga had created an atmosphere of uncertainty… there was a perception that Japan was ‘in a mess’”, says Richard Kaye of Comgest Asset Management Japan.  The Topix has gained 6.5% during the past month alone.

In most countries investors dislike the uncertainty of an upcoming election, says Takeshi Kawasaki for Nikkei Asia. Not in Japan. “Looking at the ten early elections held since 1990, stocks rose nearly every time between the day of the lower house being dissolved and the election date”. 

What seems to happen is that headlines about Japanese politics grab the attention of foreign money managers. They decide they like what they see and buy. “Typically at the mercy of trends in US equities” thanks to Wall Street’s tendency to set the tone for world markets, Japanese stocks are likely to go their own way over the coming months.

By: Alex Rankine

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Critics:

The Tokyo Stock Exchange (東京証券取引所, とうきょうしょうけんとりひきじょ), abbreviated as Tosho (東証) or TSE/TYO, is a stock exchange located in Tokyo, Japan. It is the third largest stock exchange in the world by aggregate market capitalization of its listed companies, and the largest in Asia. It had 2,292 listed companies with a combined market capitalization of US$5.67 trillion as of February 2019.

The exchange is owned by the Japan Exchange Group (JPX), a holding company that it also lists (TYO: 8697). JPX was formed from its merger with the Osaka Exchange; the merger process begins in July 2012, when said merger was approved by the Japan Fair Trade Commission.[2] JPX itself was launched on January 1, 2013.

The TSE is incorporated as a kabushiki gaisha with nine directors, four auditors and eight executive officers. Its headquarters are located at 2-1 NihonbashiKabutochō, Chūō, Tokyo which is the largest financial district in Japan. Its operating hours are from 8:00 to 11:30 a.m., and from 12:30 to 5:00 p.m. From April 24, 2006, the afternoon trading session started at its usual time of 12:30 p.m..

Stocks listed on the TSE are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers section for high-growth startup companies, and the TOKYO PRO Market section for more flexible alternative investment. As of October 31, 2010, there are 1,675 First Section companies, 437 Second Section companies and 182 Mothers companies.

The main indices tracking the TSE are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun (Japan’s largest business newspaper), the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies maintained by Japan’s major broadsheet newspapers.

Ninety-four domestic and 10 foreign securities companies participate in TSE trading. See: Members of the Tokyo Stock Exchange

Other TSE-related institutions include:

  • The exchange’s press club, called the Kabuto Club (兜倶楽部, Kabuto kurabu), which meets on the third floor of the TSE building. Most Kabuto Club members are affiliated with the Nihon Keizai Shimbun, Kyodo News, Jiji Press, or business television broadcasters such as Bloomberg LP and CNBC. The Kabuto Club is generally busiest during April and May, when public companies release their annual accounts.

Market Movers

Constituents of the Nikkei 225 with the highest percent gain over one day.

ListingLastChangeVolume
Shinsei Bank Ltd8303:TYO1,968.00
JPY
+228.00
+13.10%
9.68m
Toho Zinc Co Ltd5707:TYO2,841.00
JPY
+130.00
+4.80%
805.10k
Isetan Mitsukoshi Holdings Ltd3099:TYO808.00
JPY
+35.00
+4.53%
2.68m
Hitachi Zosen Corp7004:TYO947.00
JPY
+32.00
+3.50%
3.45m
DeNA Co Ltd2432:TYO2,167.00
JPY
+72.00
+3.44%
709.60k
Kawasaki Kisen Kaisha Ltd9107:TYO6,380.00
JPY
+190.00
+3.07%
5.45m
Mitsubishi Chemical Holdings Corp4188:TYO1,040.50
JPY
+26.50
+2.61%
5.67m
Meiji Holdings Co Ltd2269:TYO7,260.00
JPY
+170.00
+2.40%
537.60k
Pacific Metals Co Ltd5541:TYO2,094.00
JPY
+44.00
+2.15%
596.40k
Mitsui Mining and Smelting Co Ltd5706:TYO3,590.00
JPY
+75.00
+2.13%
587.70k

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Asian Stocks Mixed as Data Show Delta Sapped China: Markets Wrap

Asian stocks were mixed Tuesday as weaker economic activity in China and the latest escalation in Beijing’s crackdown on private industries overshadowed another record close on Wall Street.

Equities slipped in China, where data signaled that an outbreak of the delta virus variant led to a service-sector contraction for the first time since February last year. Hong Kong slid as Beijing’s stepped-up curbs on video-gaming firms weighed on Chinese technology stocks.

U.S. futures edged up after the S&P 500 hit its 12th all-time high in August and the Nasdaq 100 rose. Treasuries held gains made following Federal Reserve Chair Jerome Powell’s measured comments about a possible reduction in stimulus and any future interest-rate hikes. The dollar dipped.

Oil declined, with traders assessing the prospect of additional OPEC+ production. Aluminum and nickel advanced as Goldman Sachs Group Inc. raise target prices. In cryptocurrencies, Bitcoin fell to about $47,000.

Global stocks overall are set for a seventh monthly advance on strong company profits, expanding vaccinations to underpin economic reopening and supportive Fed policies. At the same time, the decline in Treasury yields from a March peak may partly reflect concerns of a slower recovery ahead on risks such as the impact of the delta strain.

“The bond market is getting a little nervous about the economic outlook,” Priya Misra, head of global interest rate strategy at TD Securities, said on Bloomberg Television. But she added the U.S. economy is “strong” and that “by year end, if the economy holds up, which we forecast it will, that’s when we expect rates — especially in the long end — to start to edge higher.”

In the latest U.S. data, pending home sales fell in July. Traders are awaiting key payrolls figures Friday for further guidance on the economy’s strength.

Here are some key events to watch this week:

OPEC+ meeting on output WednesdayEuro zone manufacturing PMI WednesdayU.S. jobs report Friday

Some of the main moves in markets:

Stocks

S&P 500 futures climbed 0.2% as of 1:42 p.m. in Tokyo. The S&P 500 rose 0.4%Nasdaq 100 futures increased 0.1%. The Nasdaq 100 rose 1.1%Japan’s Topix index rose 0.7%Australia’s S&P/ASX 200 index rose 0.6%South Korea’s Kospi added 0.8%Hong Kong’s Hang Seng index fell 1.4%China’s Shanghai Composite index retreated 0.8%

Currencies

The Bloomberg Dollar Spot Index shed 0.1%The euro was at $1.1818The Japanese yen was at 109.88 per dollarThe offshore yuan was at 6.4660 per dollar

Bonds

The yield on 10-year Treasuries held at 1.28%

Commodities

West Texas Intermediate crude was at $68.90 a barrel, down 0.5%Gold was at $1,815.12 an ounce, up 0.3%

By:

Source: Stock Market Today: Dow, S&P Live Updates for Aug. 31, 2021 – Bloomberg

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U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This Week As Beijing Targets ‘Excessive’ Wealth

Shares of Chinese tech giants trading in the United States struggled to pare losses Friday amid intensifying concerns over China’s efforts to impose sweeping new regulations on its publicly traded companies over the next several years, yielding market value losses of more than $150 billion for the 10 largest U.S.-listed Chinese stocks this week alone.

Key Facts

As of 2:45 p.m. EDT, shares of e-commerce juggernaut Alibaba, the largest Chinese company listed in the U.S., were among the hardest hit, down more than 15% on the New York Stock Exchange over the past week to $157, deflating its market capitalization to $424 billion.

Fellow online retailers JD.com and Pinduoduo, posted similarly staggering losses, wiping out about $20 billion and $10 billion in market value this week, respectively, despite ticking up about 2% Friday.

“China remains a huge source of global concern,” market analyst Adam Crisafulli of Vital Knowledge Media wrote in a Friday email, pointing to the nation’s strengthening regulatory campaign against corporations and actions that last month included demanding online education companies end their for-profit business models.

This week, shares of Chinese stocks have crashed steadily since Tuesday, when President Xi Jinping vowed to redistribute wealth in the nation by regulating “excessively high incomes”—spurring a sell-off that crushed shares of European luxury companies that do big business in China, like LVMH and Gucci-parent Kering.

U.S.-listed shares of online-gaming company NetEase, electric carmaker NIO and Internet firm Baidu plunged 11%, 10% and 10%, respectively, this week.

All told, the 10 largest Chinese companies trading in the United States have lost about $153 billion in market value since last week—more than 15% of their combined market value of roughly $940 billion.

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Key Background

In a matter of weeks, China has introduced harsh regulations targeting wide swaths of its economy and showing investors how risky investing in its market can be, Tom Essaye, author of the Sevens Report, wrote in a recent note. “Yes, there’s a huge market and lots of growth potential, but obviously there are regulatory risks that seem to be growing larger with every passing month,” said Essaye.

Last week, officials released a sweeping five-year blueprint for the crackdown, covering virtually every sector in its market. Then on Wednesday, China’s market regulators published a long list of draft rules targeting tech companies, barring them from using data to influence consumer choices and “traffic hijacking activities,” among other things.

Crucial Quote

“This is all a stark reminder that the current regulatory crackdown from Beijing is not going to let up,” Wedbush analyst Dan Ives said in a Thursday note, forecasting U.S. tech stocks, which are outperforming the broader market Friday, should benefit from the tech-focused crackdown in China over the next year. “The fear with more regulation in China around the corner is a major worry that is hard for investors to digest, and it will ultimately cause more of a rotation from the China tech sector to U.S. tech.”

Surprising Fact

The Nasdaq Golden Dragon China index, which tracks Chinese businesses trading in the United States, is down 9% this week and has crashed 51% from a February all-time high.

Further Reading

U.S., European Investment Banks May Have Lost Some $12 Billion As Chinese Education Firms Crashed (Forbes)

China’s Internet Tycoons Suffer $13.6 Billion Wealth Drop As Regulatory Crackdown Triggers Market Sell-Off (Forbes)

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism

Source: U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This Week As Beijing Targets ‘Excessive’ Wealth

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Market News

1h Does the US economy need another $480 billion in stimulus? – CNN Business
2h Top Wall Street analysts say these stocks are long-term buys – CNBC
22h Gold fails at $1,800, another selloff might be on its way – Kitco
1d Fed To Taper This Year – What Are the Odds? – Benzinga
1d Half a trillion dollars erased from China markets in a week – New York Post
1d US Indexes Close Higher Friday – GuruFocus
1d Taking Stock of Small-Cap Earnings – Zacks Investment Research
1d Fed’s Jackson Hole symposium to take place virtually due to Covid risk – CNBC
1d Fed’s Jackson Hole conference to take place virtually – Reuters
1d U.S. dollar net long bets slip in latest week -CFTC, Reuters data – Reuters
1d China Evergrande’s Bailout Hopes Continue to Fade – GuruFocus
1d Fed ‘actively working’ on US digital currency, official says – New York Post
1d Fed Minutes, Retail Data Weighed on Wall Street This Week – Schaeffers Research
1d Wall Street Week Ahead: Investors stick to stocks, but gear up for bumpier ride – Reuters
1d Looking to Cash In on a Stronger U.S. Dollar? – ETF Trends
1d U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This W… – Forbes
1d Biden Freezes Student Loan Interest Rates For 47,000 Service Members – Forbes
1d Read This Before Your Next Trade – Zacks Investment Research
1d Fed officials will seek to avoid a tantrum as they keep ‘taper talk’ going at Ja… – CNBC
1d ‘Flash recession’ could hit markets by the fall – Fox Business

Why Big Investors Are Quitting Chinese Stocks – Bloomberg Wealth

Chinese companies once ticked a lot of boxes for investors trying to follow the market’s old adages.

Diversify, they say. Well then, why not look beyond the world’s largest economy to its second? Maybe you’ve got Facebook, Amazon and Google in your portfolio already. Shouldn’t you also be thinking about Tencent, Alibaba and Baidu? You can buy them on Robinhood, after all.

Check your politics at the door, they say. So in an era when China is a bipartisan flashpoint, why not tune out the rhetoric and focus purely on returns?

That all sounds promising in a theoretical world. But in the practical one we inhabit, investing in China has become riskier, particularly this summer. In this excellent breakdown, Matt Levine of Bloomberg Opinion explains in terms you will actually understand how opaque it is to own U.S.-listed China stocks.

When you buy shares of a Chinese company listed outside of China, what you are actually buying is “an empty shell that has certain contractual relationships with the Chinese company,” Levine explains.

Sound tenuous? SEC Chair Gary Gensler thinks so. The commissioner worries that Americans just don’t know enough about Chinese companies listed on U.S. exchanges. A few weeks ago, he blocked initial public offerings of certain firms until they boost disclosures of risks posed to shareholders.

This is all coming in the context of some serious developments in China. There are mounting concerns about human rights abuses in Xinjiang and the crackdown in Hong Kong. Both have led to negative views of the country globally and pose ethical and financial dilemmas for investors increasingly thinking about the moral side of investing.

And a Chinese clampdown on capitalism has spooked investors. At its most extreme, it erased $1.5 trillion from Chinese stocks. It has hit Chinese tech companies hard. It’s prompted superstar fund manager Cathie Wood to pare her China exposure. Wood’s ARKK ETF is now sitting with no exposure to shares of companies in the world’s second-biggest economy. Other high profile investors have taken similar steps, including George Soros and Paul Marshall, co-founder of one of the world’s largest hedge funds.

And it’s not just tech. In mid-June, Chinese President Xi Jinping indicated that private tutoring — a huge expense for middle-class Chinese families — should not be such a burden. The country went on to ban for-profit tutoring, a huge deal in the $100 billion education tech sector.

Yet with proof that there is an adage for almost any angle, I offer you another: Buck the consensus view. HSBC Chairman Mark Tucker says investment opportunities in China are “too big to ignore.” And while he wouldn’t recommend Chinese equities in general, one market expert in our latest “Where to Invest” series says he would recommend two ETFs that have exposure to Chinese solar and battery technology.

Where do these adages lead us? Probably to another: Trust yourself, not some old saying. — Charlie Wells

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Source: Chinese Stocks: Should You Invest in the World’s Second-Largest Economy? – Bloomberg

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