(ATF) Hong Kong: Investors hesitated in adding risk ahead of the earnings season as a record surge in infections reined in sentiment.
Nevertheless, China’s markets outperformed after upbeat growth data and over relief a major default could be averted after the China Banking and Insurance Regulatory Commission said in a statement that China Huarong Asset Management was operating normally and had ample liquidity.
Credit markets had been rattled by worries that the debt-stricken company, controlled by China’s Ministry of Finance, was having trouble servicing its bonds.
Huarong is a quasi-domestic systematic important financial institution (D-SIFI) with total assets of 1.7 trillion yuan and has strong connections with other FIs given its core business of distressed asset management, leverage, and main funding source of bank borrowing and bond issuance.
Gold jumps
“The market is likely overly concerned on Huarong, as we expect no default for a normal operating central SOE that is too big to fail,” said Jefferies & Co analyst Shujin Chen.
Japan’s Nikkei 225 index and Australia’s S&P ASX 200 ended flat but Hong Kong’s Hang Seng index added 0.47% and China’s CSI300 surged 2.43% after the world’s second largest economy set record quarterly GDP growth of 18.3% according to data published Friday. Regionally, the MSCI Asia Pacific index climbed 0.48%.
Gold jumped 1.3% to 1787 as the dollar weakened 0.5% against a basket of currencies to 91.10. But US Treasuries caught bids as investors remained confident the US central bank would tolerate rising inflation. The 10-year yield fell a basis point to 1.57%.
The weekly Covid infection count topped 5.2 million new cases Monday, the highest since the pandemic began.
“Global growth expectations are accelerating as vaccinations increase, spare capacity is increasingly being absorbed across the developed world and central banks (led by the Federal Reserve) continue to show no inclination to tighten policy anytime soon,” said BCA Research analysts in a note.
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Asia Stocks
- Japan’s Nikkei 225 index and Australia’s S&P ASX 200 ended flat
- Hong Kong’s Hang Seng index added 0.47%
- China’s CSI300 surged 2.43%
- The MSCI Asia Pacific index climbed 0.48%
Stock of the Day
Hong Kong Exchange and Clearing Ltd shares rose as much as 3.8% in heavy volumes after Shanghai Stock Exchange amended rules for STAR Market listing restricting the listing of fintech companies, prohibiting the listing of real estate and finance companies. Analysts say this decreases Ant Group’s chance of listing on the STAR Market with Hong Kong emerging as an option.
