Finance Capital .info

China stocks rise, bucking Asian market retreats

Asian equity markets lacked direction early Wednesday, as
investors retreated to the sidelines ahead of bellwether global
events this week.

The planned public testimony by former FBI Director James Comey
on Thursday continued to stoke concerns about U.S. political
instability. Additionally, investors’ showed their nerves ahead
of a European Central Bank policy meeting and the U.K. general
election, both scheduled for Thursday.

The trio of risk events have been “sufficient to keep markets
on the defensive,” OCBC Bank said in a note Wednesday. “For
today, Asian bourses may be content to tread water.”

The Nikkei Stock Average

NIK, -0.32%

  was down 0.2% in early trade, having edged back from the
20,000 the previous session. Meanwhile, Australia’s S&P/ASX

XJO, -0.23%

  and Korea’s Kospi

SEU, -0.14%

  were both off 0.1%.

Japanese stocks were dragged down by interest-rate-sensitive
insurers. MS&AD Insurance Group Holdings

8725, -1.72%

  was down 1.4%, while T&D Holdings

8795, -0.72%

  was 1.3% lower. In Australia, the country’s “big four”
banks were down about 0.4%.

Stocks in China, meanwhile, were markedly higher, after some
listed companies sent notices to employees that markets saw as
offering a short-term boost to share prices.

Since Tuesday afternoon, 10 companies, including Qingdao
Kingking Applied Chemistry

002094, -4.27%

 , issued statements to the effect that the company’s
controlling shareholders were encouraging employees to buy
shares and would compensate them should losses occur.

The Shanghai Composite Index

SHCOMP, +0.77%

  was last up 0.8%, while the Shenzhen Composite Index

399106, +1.32%

  gained 0.9%.

In Hong Kong, the Hang Seng Index

HSI, +0.09%

  added 0.2%, led by gains in smartphone audio components
supplier AAC Technologies

2018, +16.66%

 , which surged 16% on its trading resumption. The
company’s shares were battered after short-seller Gotham City
in May accused it of dubious accounting practices, allegations
the company has repeatedly denied.

Events took an interesting turn on Tuesday, when another short
seller, Anonymous Analytics, backed the Apple supplier with a
report titled “Hong Kong Deserves A Better Hero.” It criticized
Gotham City’s earlier report on AAC as “grossly misleading.”
The Anonymous report came just hours before AAC hosted a news
briefing to further rebut Gotham’s allegations.

In currency markets, the Korean won came under pressure against
the U.S. dollar, following a stock market holiday Tuesday and
amid Korean investors catching up with the risk-aversion
sentiment. The dollar was last up 0.3% at 1120.00 won, though
the Kospi shrugged off the favorable currency winds.

Meanwhile, the yield on the benchmark 10-year U.S. government
note closed overnight at the lowest level since Nov. 10, while
London spot gold was up 1% so far this week.

“The ongoing rally in bonds and gold plus the weak dollar is
interesting,” said Ric Spooner, chief market analyst at CMC
Markets. “It suggests caution ahead of this week’s major risk

Elsewhere, crude oil faced selling pressure in Asia, after
posting gains in the U.S. session following another upward
revision of production estimates for the year by the U.S.
Energy Information Administration. The EIA now expects U.S.
crude output rise to 9.33 million barrels this year as oil
digging operations expand.

July WTI was recently down 11 cents at $48.08 a barrel, while
Brent for August delivery was 8 cents lower at $50.04 a barrel.

Add comment