Asia Markets wrap

Hong Kong: Asian markets extended gains as more evidence of economic recovery emerged with investors increasingly aligning their portfolios to the region.

“Emerging Asia is turning the corner and on its upward trajectory in terms of growth in H2 2020,” Natixis senior economist for Emerging Asia Trinh D. Nguyen said.

“China, Vietnam, Malaysia, and the Philippines to a lesser extent, have shown a rapid rebound from their trough, based on the latest June manufacturing data.”

In continuation of that trend, China’s inflation data showed producer prices rose last month for the first time since the outbreak of the coronavirus, adding to evidence that industrial demand had mostly recovered by the end of Q2.

Capital Economics economists Julian Evans-Pritchard and Martin Rasmussen said core inflation, which fell to its weakest in a decade, will probably bottom out before long.

“With fiscal stimulus and infrastructure spending still ramping up, we think that economic activity and producer prices are set to recover further in the coming months. On past form, this means that core consumer price inflation should start rising before long, too,” they said in a note.

China’s mainland index the CSI300 advanced 1.4%, rising for the eighth straight day after breaking out above its January 2018 peak.

Macro research firm BCA Research said this break out has room to run, which should support the relative performance of EM equities.

It said China’s smart recovery, from the pandemic, plus the PBoC’s willingness to ease monetary and credit conditions further to arrest any remaining deflationary pressures and US’s muted response to China’s National Security laws in Hong Kong were some of the factors behind their optimistic appraisal.

“China’s credit and fiscal impulse will rise higher in the coming quarters, which will lift earnings per share and keep the equity risk premium at bay,” the macro research firm said in a report.

Hong Kong’s Hang Seng index added 0.31%, Japan’s Nikkei 225 climbed 0.4% higher and Australia’s S&P ASX 200 benchmark advanced 0.59%.

Investors have taken the rise in infection count in the US – where coronavirus cases jumped by a single day record of 62,000 – in their stride.

Asian credit markets also joined the risk rally with the Asia IG index shrinking by 2 basis points to 78.5/79.5 with sovereign CDS moving in by 1-2 basis points. New issues continue to flow with bond offerings from Yankuang GroupHangzhou FinanceThailand’s PTTZhongAn Online and Shandong Energy  

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Asia Stocks

# Japan’s Nikkei 225 climbed 0.4%

# Australia’s S&P ASX 200 added 0.59% 

# Hong Kong’s Hang Seng index edged up 0.31%

# China’s CSI300 jumped 1.4%

# The MSCI Asia Pacific index edged up 0.29%.

Stock of the day 

E-commerce giant Alibaba rose as much as 11% after Reuters reported that Ant Group, its fintech arm, plans a Hong Kong float as soon as this year and targets a valuation of more than $200 billion.  

This report appeared initially on Asia Times Financial.

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