Asia Markets wrap

Hong Kong: Asian markets advanced on Friday, finishing with broad gains lead by Chinese stocks as investors expect the streak of upbeat economic data to translate into better corporate performance.

Investors are however watching US-China tensions after a report that tech giant Tencent is under scrutiny by the US administration who are seeking information about data-security protocols.

Next week, China will update the loan prime rates and release industrial profit figures which are expected to reflect the economic rebound.

“The latest Chinese macro data download this week has certainly confirmed the ongoing cyclical recovery, most particularly the continuing recovery in private sector fixed asset investment (FAI) and manufacturing FAI,” said Christopher Wood, strategist at Jefferies & Co. He said the scale of the bounce-back reflected the collapse in capital spending in the first quarter when the mainland economy went into lockdown and corporates went into capital preservation mode.

“The need to rebuild inventories implies much greater demand at the wholesale level than at the retail level. All this is good news for the cyclical trade. This is a reason not just to own internet names in a China equity portfolio. But even for those equity investors globally not involved with China, the inventory rebuild story has forward looking implications for the rest of the world since companies in the rest of the world went into cash preservation mode after China.”

There is investor caution after a Bloomberg report the Committee on Foreign Investment in the US, which is chaired by the Treasury Department, has sent letters to companies, including Epic Games Inc, Riot Games and others, to inquire about their security protocols in handling Americans’ personal data.

China’s tech sector is already in the spotlight after President Donald Trump said last week the United States would ban WeChat-related transactions in the country.

Hong Kong’s Hang Seng index advanced 0.47%, China’s CSI 300 benchmark surged 2.25%, and Japan’s Nikkei 225 inched up 0.18%. Australia’s S&P ASX 200 was the regional under-performer losing 0.32% as weak banking shares weighed.

Gold climbed 0.5% and Oil extended gains with the WTI up 1.2%.

Oil prices up

Oil prices rose after OPEC put pressure on members that did not cut output.

“The JMMC (Joint Ministerial Monitoring Committee) reiterated the critical importance of adhering to full conformity and compensating overproduced volumes as soon as possible,” it said in a statement.

“The JMMC supported, and recommended, to the OPEC and Non-OPEC Ministerial Meeting, the request of several underperforming participating countries in the DoC to extend the compensation period till end of December 2020, after pledging that they will fully compensate for their overproduction.”

Asian credit markets were quiet, digesting recent issues and awaiting the next wave of bond offerings. The Asia IG index was flat at 57/58. Overnight, China Aoyuan priced bonds due in 2026 in a $350-million raising and Tingyi $500-million bond offering got orders of over $3.3 billion. In today’s deals Hefei Industry issued the final price guidance for a 3-year bond, and Tangshan’s 3-year bond price guidance was announced in a deal to be finalised today.  

The primary market pipeline remains quite busy after CDB Leasing hired banks for a tier-II sub-debt issue, and Hangzhou Jianggan District Urban Construction was also pushing ahead its plan for a bond offering.

ATF China Bond 50 Index: Banks extend gains, boost flagship bond index 

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Asia Stocks

· Japan’s Nikkei 225 index edged up 0.18%

· Australia’s S&P ASX 200 lost 0.32% 

· Hong Kong’s Hang Seng index added 0.47%

· China’s CSI300 soared 2.25%

· The MSCI Asia Pacific index advanced 0.35%.

Stock of the day

Shanghai Junshi Bio rose as much as 4.7% outperforming the broad market, after it said its drug Toripalimab for the treatment of soft tissue sarcoma has recently been granted approval by the US Food and Drug Administration. 

“The designation will reduce the R&D investment on the new drug to a certain extent and accelerate the progress of clinical trials and market registration,” the company said in a statement.

This report appeared initially on Asia Times Financial.

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