Asia Stocks Hold Strong Amid Positive China and Country Garden News

Asian stocks remain strong as positive news from China and Country Garden boosts investor confidence. Despite a slow start to the week in other markets, China’s support for its bullish market and the US Labor Day holiday allowing for a break in policy discussions have contributed to an improved risk appetite in Asia. The recent positive news surrounding China’s struggling real estate industry and Country Garden further adds to the cautious optimism among investors. Meanwhile, the MSCI’s index of Asia-Pacific shares outside of Japan has reached its highest level in a month, while Japan’s Nikkei also shows a slight increase. 

Hong Kong’s Hang Seng is back in action after a long weekend and has experienced a significant jump, thanks to Country Garden’s approval for a delay in onshore bond payment. The Chinese government’s efforts to promote the private economy and remove barriers for the services industry have also boosted market sentiment.

China’s central bank, the People’s Bank of China (PBoC), made a notable move by cutting its foreign exchange reserve requirement ratio (FX RRR) from 6.0% to 4.0%, effective from September 15. Several Chinese banks have also lowered interest rates on Yuan deposits, aiming to ease the pressure caused by previous announcements of lower mortgage rates. Additionally, it is reported that China is likely to take further action to revive the country’s property sector.

On the other hand, tensions between the US and China, particularly concerns from American businesses regarding Beijing and US President Joe Biden’s stance on Taiwan, have also influenced market optimism during this time.

While Australia’s Company Gross Operating Profits for Q2 2023 have disappointed and Japan’s Monetary Base for August has shown positive results, Australian and Japanese markets continue to perform well, mainly supported by Chinese equities. New Zealand’s stocks, however, have experienced minor losses despite an improvement in the country’s Terms of Trade Index for Q2 2023.

Overall, the receding expectations of the Federal Reserve’s hawkish moves in the future, coupled with China’s efforts, have kept buyers in the Asia-Pacific region hopeful, especially considering the US Labor Day holiday.

In broader markets, the US Dollar Index (DXY) has seen mild losses after a two-day winning streak, while S&P 500 Futures show modest gains. It is worth noting that US 10-year Treasury bond yields have dropped in the past two weeks after reaching their highest levels since 2007, currently at 4.18%.