Hong Kong: Asian markets were broadly higher on Tuesday as the focus shifted back to economic revival and countries reopen more business sectors and stimulus programs are announced to support growth.
Officials in China and Hong Kong moved to reassure the global investor community about the proposed national security law, which they said targets “violent and terrorist forces”.
Hong Kong’s Hang Seng index jumped 1.88% and China’s CSI 300 index was 1.13% higher.
China’s central bank said it will continue to reduce interest rates and improve the flow of credit into the world’s second-largest economy, which shrank in the first quarter – the first contraction since 1992.
People’s Bank of China governor Yi Gang said the central bank “will continue to deepen LPR reform, unblock the transmission channel of money market interest rates to loan interest rates, promote the reduction of real loan interest rates, and support the development of the real economy. At the same time, advance the conversion of the stock loan benchmark in an orderly manner.”
Singapore stimulus package
Singapore unveiled a fiscal package of $23 billion aimed at saving jobs – similar to the focus of the ongoing meeting of China’s parliament, the National People’s Congress.
“We expect China to open up financial services significantly, inviting foreign capital and talent that will help create value-added jobs in the country,” Binay Chandgothia, the managing director and portfolio manager at Principal Global Investors, said.
“The removal of a GDP growth target allows China to focus on employment, social stability and national security. We believe monetary policy will fully support fiscal initiatives to drive growth and we expect lower policy rates, RRR cuts and active support of banks through refinancing schemes. Infrastructure spending will remain important but will be directed towards social housing, transportation and new economies such as 5G technology, power grids and developing clusters of economic excellence,” he said.
Elsewhere in the region, governments and authorities are also acting to arrest the economic downturn.
Japan’s Prime Minister Shinzo Abe said total amount of stimulus from two economic packages would exceed 200 trillion yen ($1.86 trillion) after Monday’s fresh 100-trillion-yen stimulus.
The Nikkei 225 surged 2.55% and Australia’s S&P ASX 200 soared 2.93%.
Credit markets also saw greater appetite for risk, with the Asia IG index a basis point tighter at 105/106 bps and the primary market was active with a broad range of investment grade offerings. In the market are BOC Aviation, Shandong Hi Speed, China Ping An, Hysan Development and CITIC Securities.
“Improving offshore China sentiment can be seen in both firmer secondary market pricing, and a recovery in primary issuance,” DBS analyst Chang Wei Liang said.
“Month-to-date issuance for May has surpassed full-month issuance in April. Beyond issuance size, the offshore market has also turned more receptive to HY credit, after largely shunning them in April. Three HY property-linked bonds have been unveiled in May, indicating that access for HY credit is slowly thawing amidst stronger global risk sentiment.”
Also on Asia Times Financial:
Foreign Exchange: As Japan, Germany reopen, global stocks jump, yuan stabilises
· Japan’s Nikkei 225 surged 2.55%
· Australia’s S&P ASX 200 jumped 2.93%
· Hong Kong’s Hang Seng index climbed 1.88%
· China’s CSI300 rose 1.13%
· The MSCI Asia Pacific index advanced 1.33%.
Stock of the day
Meituan Dianping rose as much as 10.4% and topped the Hong Kong exchange volumes table after the e-commerce platform reported a higher operating margin in the food delivery business where it says “the Covid-19 pandemic will play a positive role in the industry’s long-term development.”
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