China Holds Rates Steady, Shanghai Indexes Rebound, Japan Machinery Orders Advance

Arjun Pandit
19 Feb, 2024
Mumbai

In Asian markets, benchmark indexes in China advanced after investors returned from a week-long lunar new-year holiday, and the People's Bank of China held its one-year loan prime rate at 2.5%. 

The market indexes in Hong Kong and Seoul advanced, but the indexes in Tokyo, Taiwan, Sydney, and Singapore struggled to advance. 

 

The Nikkei and the Yen Trade Sideways in Tokyo 

The Nikkei 225 index declined 0.08% to 38,454.85, tracking losses in overnight trading in New York. 

On the economic front, core machine orders rose 2.7% to 838.8 billion yen from the previous month in December, the Cabinet Office said on Monday. 

On a yearly basis, core machine orders, which exclude orders for ships and electric power companies, decreased 0.7% after dropping 4.9% in the previous month. 

For the fourth quarter of 2023, orders were down 1.0% from the previous quarter and 2.5% from a year ago. 

Despite the high volatility in the data series, the monthly report provides insights into the capital spending plans in the upcoming six to nine months. 

The Cabinet Office forecasted orders to increase 4.6% in the first quarter from the fourth quarter but decline 0.2% from the previous year. 

Exporters, automakers, and electronics companies declined after the yen hovered just below the 150 level against the U.S. dollar. 

Mitsubishi Electric, Panasonic, and Sony declined between 0.3% and 1.1%, and Nintendo declined more than 5%. 

Mitusi & Company, Oriental Land, Isetan Mitsukoshi, JGC Holdings, Sumitomo Pharma, and Mercari advanced more than 2.5%. 

 

China Holds Rates, Shanghai, and Hong Kong Stocks Resume Slide 

The People's Bank of China held its rate steady while balancing pressure on the yuan and the need to support the flagging property market. 

The central bank held its one-year loan prime rate for the sixth month in a row. 

Just before the new-year holidays, the People's Bank of China cut the reserve ratio requirement for banks by 50 basis points, freeing up more capital for loans. 

Two weeks ago, a China-controlled sovereign fund also stepped up its purchase of leading stocks in Shanghai and Hong Kong. 

However, market sentiment has remained negative, with no end in sight for the property market's slump. 

Investors returned after the Lunar New Year holidays last week, but caution prevailed in Shanghai and Hong Kong trading. 

Market indexes opened higher in mainland trading as investors sought to catch up with last week's trading in Asia and around the world, but market mood turned cautious on the twin worries of the ongoing property market slump and persistent selling by foreign investors. 

The CSI 300 index increased 0.4% to 3,379.20, and the Hang Seng index declined 0.8% to 16,186.81. 

Alibaba Group, JD.com, Tencent, and Baidu decreased between 0.5% and 2.5%, amid weakness in the tech sector. 

Property sector stocks traded down and extended this year's losses. 

Longfor Group, China Vanke, China Resources Land, and Country Garden Holdings declined between 3% and 5%. 

 

China's Lunar New Year Holiday Travel Soared 

Domestic tourism appeared to be on the rebound of three years of decline during the latest Lunar New Year holiday last week, the Ministry of Culture and Tourism data released today suggested. 

Overall, domestic tourism jumped to 632.7 billion yuan, or $87.7 billion, an increase of 50% from the previous year's holiday period. 

The number of domestic trips increased 34.3% from a year ago and jumped 19% from the 2019 level, indicating pent-up demand for travel. 

The tourism revival provided a shot in the arm to overall consumer spending, as many retrenched from making large purchases amid the protracted housing market slump and weak job market. 

Overseas trips jumped to 6.83 million in the holiday period as tourists took advantage of visa-free travel to Singapore and Thailand, and Japan, Malaysia, and South Korea remained popular destinations. 

 

India Indexes Lack Direction In Lackluster Trading

Stocks in Mumbai opened higher, and bond yields and the rupee held firm in Monday's trading. 

The Sensex and the Nifty indexes edged up 0.1% in early trading, and mid-cap and large-cap stocks were among the early gainers. 

Market sentiment was positive as companies in the power and energy, engineering, transportation, automotive, and travel entertainment sectors reported better-than-expected earnings. 

With the end of the earning season last week, investors shifted their focus to upcoming economic releases and international markets. 

The Reserve Bank of India is scheduled to release its latest policy meeting minutes this week, and investors also reviewed the latest international trade data last week. 

India's current account deficit is likely to shrink further in the coming quarter amid the strong export performance of the service sector. 

Moreover, the latest policy meeting minutes are likely to shed more light on the future interest rate path as food price inflation continues to drive overall inflation higher. 

The Sensex index increased 94.80 points to 72,526.80, and the Nifty index rose 43.85 points to 22,082.35.

On the Mumbai stock exchange, 204 stocks traded at their 52-week highs and 4 stocks traded at their 52-week lows.