Dear clients,
Asian stocks fell on Tuesday as weak service sector data renewed fears of a faltering post-pandemic Chinese economy.
The MSCI was down 0.65% at 511.63, moving away from 515.37, the highest level since 11 August, which it reached on Monday.
Futures indicated that the gloomy mood is likely to spread to Europe, with the Eurostoxx 50 futures down 0.21%, Germany’s DAX down 0.20% and the FTSE futures down 0.29%.
The recent rally in Chinese equities, fuelled by a series of government measures aimed at supporting the weakening economy, is quickly fading. The CSI 300 blue-chip index fell 0.58% and Hong Kong’s Hang Seng fell 1.5% after these markets recorded their best day in over a month on Monday.
Optimism quickly faded after a private sector survey on Tuesday showed that China’s service sector activity grew at the slowest pace in eight months in August as weak demand continues to haunt the world’s second-largest economy and stimulus measures failed to significantly revive consumption.
Nevertheless, investors are hopeful that Beijing’s drip-feed of stimulus will be enough to stabilise the Chinese economy.
In a rare piece of good news for China’s crisis-hit property sector, a source close to Country Garden said the company made interest payments on two dollar bonds just as the grace period was due to end on Tuesday.
On Friday, China’s largest private property developer received approval from onshore creditors to extend a 3.9 billion yuan ($536 million) private bond.
