Dear clients,
Chinese stocks led the rally in Asian equities on Tuesday as investors welcomed Beijing’s efforts to support markets, while bonds rose and the dollar declined amid possible softening in U.S. data.
MSCI, the broadest index of Asia-Pacific shares besides Japan, rose 1%, Hong Kong’s Hang Seng was up more than 2% and mainland China’s blue chips (.CSI300) were up 1.5%.
In recent days, China has halved stamp duty on share trading, relaxed margin lending rules, slowed new listings and approved new retail funds, at least signalling a determination to stabilise the market.
And while foreign investors sold their shares on Monday on an initial bounce after the measures were announced over the weekend, they net bought about $500 million worth of Chinese stocks on Tuesday, perhaps in the hope that more substantial relief would follow.
„We doubt that these policies alone can change confidence or determine the direction of the market,“ Bank of America analysts said.
„Financial markets are merely a reflection of the underlying economy, and we need policies that can address the underlying economic fundamentals …. In our view, the next 2-3 weeks are still an important window for policy action.“
Shares in Hong Kong were led by shares in China’s struggling Country Garden and electric car maker BYD, which reported a threefold increase in first-half profit.
