China Stocks Rise as Technology Gain Overshadows Profit Concern

30 Sep 2015 | Author: | No comments yet »

Accept your fall from grace, Chinese state-run paper tells Li Ka-shing after he rebukes critics.

Li Ka-shing should adapt himself to his “de-deification” on the mainland as he is no longer deemed a patriotic exemplar but just a profit-driven businessman, said the Communist Party mouthpiece Global Times today in response to the tycoon’s stern rebuttal to mainland media criticisms.

Pauline Dan predicts Hong Kong equities will rebound at least 10 percent by year-end after a selloff this quarter made the Hang Seng Index the worst performer in developed markets.From stocks to commodities to emerging-market currencies, traders breathed a sigh of relief at the end of the most volatile quarter for financial markets since 2011.Chinese and Hong Kong shares held steady in Wednesday’s morning session after a positive start in the last trading day of the third quarter and before mainlanders pack up for a week-long holiday.

But from a business perspective, they think that this is normal,” the editorial said, adding that the change in attitude towards the tycoon was simply “objective” and “normal”. Shares in the world’s fourth-largest stock market have historically performed best in the fourth quarter, with the benchmark gauge recording a 5.8 percent gain on average, according to data compiled by Bloomberg. Turnover dropped to 79.4 billion yuan, as investors wrap up positions in anticipation of the golden week holidays, said Gerry Alfonso, a director at Shenwan & Hongyuan securities in Shanghai. Chinese markets will be shut from October 1 to 7, reopening for business on October 8. “The correction yesterday was likely overdone and impacted by the approaching holidays, which likely reduced the number of retail investors in the market.” Investors zoomed in on auto stocks after Beijing announced on Tuesday it was halving the purchase tax on passenger vehicles, and pledged support to electric cars. “The market is likely to range-bound between 20,800 and 21,000 in the short term.

The commentary noted that it was “highly unusual” for the tycoon to choose to respond after President Xi Jinping’s high-profile visit to the US and before the national day celebration. “It seems that he really cares about his image on the mainland,” it said. “Mainland society does not view the recent comments about him as antagonistic. But with mainland China entering holiday, and more data expected from the United States early next month, uncertainties are still concerning investors,” Louis Wong, director of Philip Securities, said. Riskier markets have sold off amid a prolonged commodity slump, slowing growth in China and an exodus from emerging-market assets as the U.S. prepared to raise interest rates as soon as this year.

Commenting on the policy induced rally in the auto sector, Wong said: “As overall sentiment is still fragile, such a rally is difficult to sustain.” Meanwhile, mainland newspaper International Finance News published an in-depth report yesterday claiming that from January last year to April this year Li cashed in almost 80 billion yuan through asset transfers and other means, and relocated registration of all his mainland firms overseas.

In the U.S., a report from the ADP Research Institute will show employers added 190,000 workers to payrolls this month, the same as in August, economists predicted. Bloomberg’s China Monetary Conditions Index, a gauge that includes inflation-adjusted interest rates and the exchange rate, improved for a second month in August — the first back-to-back gain since 2013.

Episodes of improvement in the past have tended to presage either an acceleration or a stabilization in economic growth. “The concerns about China are overdone,” said Andrew Gillan, Singapore-based head of Asian equities excluding Japan at Henderson Global Investors, which oversees about $130 billion. “China is still going to grow at more than 6 percent and that’s going to give us a lot of opportunities.” Glencore’s “rebound is a reflection of the management’s positive commentary that trading has been good, cashflow is stable,” Konstantin Giantiroglou, head of investment advisory and research at Neue Aargauer Bank in Brugg, Switzerland,. “It puts part of the fear that was circling around the stock aside.” The yen declined for the first time in three days against the dollar as stocks rebounded, dimming demand for haven assets. The 19-member currency pared its second quarterly gain against the greenback, after falling the most since its inception in the first quarter of this year. The Bloomberg JP Morgan Asia Dollar Index, which tracks the region’s 10 most-active currencies outside of Japan, has dropped 4.1 percent this quarter, its worst performance since 2008. Malaysia’s ringgit fell about 14 percent as China devalued the yuan in August, oil prices retreated and Prime Minister Najib Razak was caught up in a corruption investigation.

The yield, which had fallen 11 basis points in the previous two days amid the selloff in stocks, is poised for its biggest quarterly drop this year as falling commodity prices dimmed the outlook for inflation and the Federal Reserve held off from raising rates. Copper rose 2.7 percent to $5,102 a metric ton on the London Metal Exchange, paring a fifth straight quarterly loss to 12 percent, with nickel up 3.1 percent.

West Texas Intermediate is set for the lowest quarterly average price since the first three months of 2009 as industry data showed U.S. crude inventories expanded and Iraq, OPEC’s second-largest producer, increased output. The Shanghai Composite Index added 0.5 percent, leaving the three-month decline at 29 percent, the biggest drop among 93 equity gauges tracked by Bloomberg . Brazil’s real led declines in currencies since June, sliding 24 percent as S&P cut the country’s credit rating to junk amid political turmoil and a corruption probe into a state-controlled oil company.

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