Asia Markets wrap

Hong Kong: Investor sentiment was lifted by upbeat data from the world’s two biggest economies, although China’s sanctions against 11 Americans in response to a similar move by the United States, served as a reminder about the ongoing tensions between the two.

China released a list of 11 Americans sanctioned in retaliation for similar measures imposed by the US on Friday. Chinese Foreign Ministry spokesperson Zhao Lijian said these sanctions were made on individuals “with egregious records on Hong Kong affairs”.

That took off some of the shine from the rally posted after China reported a moderation of deflation as economic recovery took hold, following a strong US jobs report on Friday.

“We expect the easing in PPI deflation to continue over the remainder of this year, on improving domestic and external demand. Domestically, we expect infrastructure and property investment to pick up further in H2,” Barclays economists said in a note.

“We expect non-Covid related exports to continue to recover steadily amid overseas reopenings and unprecedented policy stimulus, which should create an offset against declining pandemic-related exports.”

Australia’s ASX 200 climbed 1.76% and the CSI 300, of top stocks at the Shanghai and Shenzhen stock exchanges, added 0.36%.

Hang Seng down

Markets in Japan were closed on Monday for a public holiday. But Hong Kong’s Hang Seng Index fell 0.63% dragged down by index heavyweight Tencent, as the stock continued to come under pressure following the US WeChat ban. Tencent fell as much as 5%.

“Tencent’s 2019 overseas revenue was less than 5% of their total, thus we don’t expect a significant impact on Tencent in our base case,” Chelsey Tam, Morningstar’s senior equity analyst, said.

“The impact on valuation would be more severe if the implementation included banning all transactions of Chinese businesses of US companies with Tencent as a whole, as this would also hurt Weixin, advertising in mainland China by US affiliated firms, the international cloud business, the international gaming business, and so on for Tencent.”

Earlier the market had been lifted by Friday’s US jobs report which showed the world’s largest economy added 1.76 million jobs in July, bringing total job growth over the last three months to 9.3 million, recovering 42% of the jobs lost.

“The seemingly positive surprise in July employment creates a short-term risk for stocks. It puts some upward pressure on the dollar. A stronger dollar hurts foreign-sourced profits on which the tech titans that drive the market heavily depend,” BCA Research analysts said in a note.

The US dollar recovered trading at 93.62 against a basket of currencies, up 0.2% and gold was flat at around $2,030 per ounce.

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Asia Stocks

# Australia’s S&P ASX 200 jumped 1.76% 

# Hong Kong’s Hang Seng index drops 0.63%

# China’s CSI300 added 0.36%

# The MSCI Asia Pacific index inched up 0.1%.

Stock of the day

JS Global Lifestyle Co rose as much as 33.9% after the appliance maker said profit for the six months to June would rise to over $100 million compared with $21.9 million a year ago.

This report appeared first on Asia Times Financial.

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