Sat, Oct 23, 2021 @ 17:57 GMT
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Asian Equities Off To A Flying Start

Asian markets post gains as Evergrande fears recede

With no major developments on the Evergrande front over the weekend, markets seem to have priced in oblivions for the EV subsidiary already, Asian stock markets are off to a flying start. Banks are leading the rally across the Asia-Pacific region, I am guessing on the assumption that no material compromise will occur if the China property market hiccups.

All the more interesting is that Asia is ignoring the non-descript finish in New York, where rising US bond yields and a supply chain warning from Nike ahead of the crucial Christmas season, unwound intraday rallies and left Wall Street almost unchanged. The S&P 500 rose just 0.15% while the Nasdaq edged lower by 0.03% and the Dow Jones closed just 0.10% higher. US futures on all three indexes have rallied powerfully today, rising by 0.50% on no news is good news euphoria.

Asian markets have given back some of their early gains but are broadly higher. The Nikkei 225 is up 0.50% while the Kospi is 0.45% higher. In China, the broader Shanghai Composite is 1.30% lower, but the narrower SOE-heavy Shanghai 50 has leapt 2.0% higher. The CSI 300 has rallied 0.85% while the Hang Seng is 1.05% higher. The price action suggests to me that China’s “national team” is out and about buying, with another liquidity injection by the PBOC helping proceedings.

Regionally, Singapore has leapt 1.20% higher led by the big banks, while Kuala Lumpur and Jakarta have slipped by 0.30%. Taipei has risen by 0.20% while Bangkok and Manila are unchanged. Australian markets are enjoying a stellar day as commodities and energy rally, with those two sectors and banking outperforming. The ASX 200 is 0.80% higher, with the All Ordinaries rising by 0.70%.

It seems that a dialling down of contagion fears, with some subtle assistance from China has been an irresistible lure for the buy-the-dippers. Interestingly, the commodity-centric KLCI and JCI are the worst regional performers today, with ASEAN, Singapore excepted, suffering from a rotation back into the North Asia heavyweights. European stock markets are likely to take their lead from Asia’s reduced Evergrande concerns, and open higher this afternoon. UK markets could be the exception after petrol stations ran dry there over the weekend and winter of discontent noises increase.

 

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