Asia stocks mixed as China surges on new shorting rules
HONG KONG–Asian stocks were mixed in afternoon trading Tuesday, as China announced new rules restricting short selling after a recent market rout and Australia held interest rates at rock-bottom levels.
Shanghai jumped 3.69 percent or 133.63 points to 3,756.54, while Hong Kong ended flat, down 0.02 percent, or 5.3 points, to 24,406.12.
Tokyo eased 0.14 percent, or 27.75 points, to close at 20,520.36, while Seoul gained 0.97 percent, or 19.50 points, to close at 2,027.99.
In Australia, the benchmark S&P/ASX200 index advanced 0.33 percent, or 18.6 points, to close at 5,697.9.
Shanghai enjoyed a late spurt after China’s two stock exchanges announced new rules that effectively restrict short selling, declaring Monday that investors who borrow shares must wait until the next day to pay back the loans, instead of settling the same day as under previous rules.
Since the Shanghai market crashed 30 percent from its peak in mid-June, China has announced a series of stabilizing measures, including a ban on major shareholders selling stocks and suspension of new share offerings.
The Shanghai exchange statement said the move aimed to improve risk management and protect market order.
“All the government’s measures including restrictions on short selling are working now,” Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co., told Bloomberg News. “It’s a rebound and given the momentum, it may last for some days.”
In Australia, the central bank held interest rates at a record low of 2 percent while keeping the possibility of further easing on the table.
The Reserve Bank of Australia (RBA) has slashed rates by 250 basis points since November 2011, with the latest 25 basis points cuts coming in February and May, as the economy adjusts to a shift away from an unprecedented boom in mining investment.
China receives most of Australia’s iron ore and coal exports, and central bank governor Glenn Stevens said in June the country was “more sensitive to fluctuations in China’s performance than other countries.”
Investor nervousness has been compounded by weak Chinese manufacturing activity last month, with similarly negative data announced in the United States on Monday.
On Monday, Wall Street fell with petroleum-linked equities retreating on a big drop in oil prices.
The Dow Jones Industrial Average declined 0.52 percent, while the broad-based S&P 500 shed 0.28 percent.
Asian investors were also bracing for a heavy week of US economic indicators.
The most eagerly anticipated release is Friday’s jobs report for July, which could strengthen confidence the Federal Reserve will soon raise interest rates, perhaps even in September.
In Tokyo share trade, Toyota fell 0.96 percent to end at 8,121 yen. The company said after the closing bell its net profit for the three months to June jumped 10 percent to $5.2 billion.
Markets await US economic indicators
Elsewhere, India’s central bank kept its own key interest rate on hold Tuesday, as analysts had expected, resisting government pressure for a fourth cut of the year.
The Reserve Bank of India (RBI) has cut rates three times in 2015 to aid India’s economy, which outperformed China’s for the first three months this year.
The RBI said the benchmark repo rate–the level at which it lends to commercial banks–would remain at 7.25 percent.
Government pressure to announce another cut was eased by data released Monday that showed factory output climbed to a six-month high in July on strong demand.
Meanwhile, in Tokyo forex trade the dollar was at 123.90 yen, slightly down from 123.99 yen in New York late Monday.
The euro remained under pressure at $1.0966 and 135.95 yen against $1.0954 and 135.82 yen in US trade.
Standard & Poor’s said it had changed the outlook for the European Union from stable to negative after the bloc’s support for Greece and following Britain’s decision to vote on leaving the EU.
On Monday, Greece’s stock exchange, resuming trade after a five-week shutdown, plunged around 20 percent at the open before finishing down 16.23 percent in its biggest single-day drop ever.
Adding to broader regional concerns, the 19-nation eurozone’s inflation and jobless rate came in flat in July, according to data published on Friday, suggesting only modest growth.
Crude oil remained below $50 a barrel in Asian trade amid concern over a global supply glut, but US benchmark West Texas Intermediate for September rose 47 cents to $45.64 while Brent crude for September increased 32 cents to $49.84.
Gold fetched $1,092.65 an ounce compared with $1,092.73 on Monday.
In other markets:
— Mumbai fell 0.41 percent, or 115.13 points, to end at 28,071.93 points.
Hero Motor Corporation fell 2.73 percent to 2,624.25 rupees, while Tata Steel gained 3.39 percent to 256.40 rupees.
— Bangkok slid 0.69 percent, or 9.88 points, to 1,432.16.
Electricity Generating dropped 0.65 percent to 153.50 baht, while oil company PTT fell 2.75 percent to 318 baht.
— Kuala Lumpur lost 1.17 percent, or 20.46 points, to 1,723.73.
Maybank fell 0.11 percent to 9.17 ringgit and British American Tobacco dropped 0.89 percent to 66.70 ringgit, while Public Bank rose 0.52 percent to 19.16 ringgit.
— Singapore closed down 0.05 percent, or 1.75 points, to 3,191.04.
Real estate developer Capitaland eased 1.85 percent to Sg$3.18 while Singapore Airlines slipped 1.34 percent to Sg$$10.31.
— Jakarta ended down 0.40 percent, or 19.10 points, at 4,781.09.
Coal miner Bukit Asam gained 5.04 percent to 6,250 rupiah, while telecommunications infrastructure company Tower Bersama Infrastructure fell 3.31 percent to 8,025 rupiah.
— Taipei edged down 0.16 percent, or 13.55 points, to 8,510.86.
Taiwan Semiconductor Manufacturing Co. was up 1.49 percent to Tw$136.5, while leading chip design house MediaTek shed 6.35 percent to Tw$280.0.
— In Wellington, the NZX-50 was down 0.40 percent, or 24.09 points, at 5,933.76.
Spark was 1.67 percent off at NZ$2.945 while Meridian Energy was down 1.29 percent at NZ$2.29.
— The Philippine stock exchange closed 0.33 percent higher, gaining 25.03 points to close at 7,598.29.
Top-traded Globe Telecom Inc. gained 1.37 percent to 2,670 pesos while Metropolitan Bank and Trust Co. rose 0.51 percent to 88.50 pesos.–Jennifer O’Mahony
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