Foreigners pile into China stocks as red flags loom

29 May 2015 | Author: | No comments yet »

Dollar, Chinese shares steady as Europe wobbles.

LONDON The dollar inched higher on Friday, putting it on track for a monthly rise in May, while Chinese shares steadied after a plunge a day earlier that stoked concerns about the financial health of the world’s second largest economy.

Emerging-market stocks headed for the largest monthly drop this year as industrial companies tumbled and investors weighed the timing of a U.S. interest-rate increase. European stock markets .FTEU3 were a touch lower, with dealers pointing to doubts over Greece’s ability to make good on a promise it would reach a cash-for-reforms deal with its euro zone partners by Sunday. Oil markets were almost 1 percent higher, while prices of German government bonds, a safe haven for money in the euro zone looking for refuge from the Greek worries, rose. The dollar spent much of April and May in its roughest patch since the start of a rally last year that has changed the playing field for business and financial investors worldwide. So we would rather be long of the dollar against the yen, pound and Aussie and Canadian dollars.” Earlier, Asian shares had risen as Chinese shares edged back from the previous day’s dizzying plunge, though regional investors remained fearful that the world’s best performing equity market was at the beginning of a major correction.

Buoyed by China, Australia .AXJO and South Korea <.KS11??, the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.5 percent, but looked set to slip 1.5 percent on the week. The gauge has slumped 3.7 percent this month as more positive U.S. data boosted the odds for the Federal Reserve to raise interest rates soon, dimming the appeal of riskier assets. The U.S. updates first-quarter growth data Friday. “What has surprised recently is the stronger set of economic data that we have received from the U.S., which means the Fed can increase rates soon,” said Mixo Das, a Singapore-based equity strategist at Nomura Holdings Inc.

The Frankfurter Allgemeine Zeitung changed the quote in versions of the interview run in print and online editions on Friday to read: “Nobody would wish a Grexit on the Europeans.” “Quite a lot of discord over Greece has materialized overnight, with there generally being huge scepticism over a deal being done this weekend,” said Mizuho strategist Peter Chatwell. Evergrande plunged the most on record after being forced to cut the price of a share sale that analysts said will do little to reduce the company’s indebtedness. Philippine shares rose 1 percent after UBS Group AG said some shares offered a buying opportunity following a six-day slump for the nation’s equity gauge.

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