China Steps Up Market Intervention, Japan Trade Gap Shrinks In January

Arjun Pandit
20 Feb, 2024
Mumbai

In Asia, market indexes lacked direction, but benchmark indexes soared more than 2% in Shanghai and Hong Kong after bargain hunters snapped up tech and healthcare stocks. 

In overnight trading, tech stocks were under pressure in New York ahead of the release of Nvidia earnings. 

But markets in mainland China and Hong Kong soared after government-controlled funds stepped up buying to stabilize financial markets. 

The Nikkei 225 decreased 0.3% to 38,260.93, and the Topix index fell 0.2% to 2,626.49 following the weakness in tech stocks. 

A private survey conducted by Reuters Tankan showed a sharp decline in business confidence in February. 

The confidence indicator dropped to -1 from +6 in January, highlighting interest rate uncertainties and persistent weakness in the yen. 

The private survey is considered a leading indicator of the Bank of Japan's official survey. 

 

Japan Trade Gap Shrinks after Exports Rebounded 

Japan's exports surged 11.9% to 7,332.65 billion yen, the fastest increase in exports since November 2022, the Ministry of Finance reported Wednesday. 

Exports soared on the back of higher shipments of transportation equipment, passenger cars, and semiconductor and electrical machinery and equipment. 

The trade deficit narrowed to 1,758.3 billion yen from 3,506 billion yen after imports declined 9.6% to 9,090 billion yen from a year ago, respectively. 

 

China Intervention Lifts Shanghai and Hong Kong Indexes 

Benchmark indexes in Shanghai and Hong Kong advanced to multi-week highs following the largest cut in the 5-year loan prime rate of 25 basis points since the introduction of the rate in 2019. 

Moreover, mainland-controlled funds stepped up investing in stocks, as reflected in the rising assets of exchange-traded funds, indicating intervention by the government. 

The CSI 300 index increased 1.8% to 3,472.68, and the Hang Seng index soared 3% to 16,735.92. 

The Hang Seng index jumped to a seven-week high after property developers rose on speculation that the government is set to announce additional measures to facilitate property demand and ease the tax burden. 

Longfor Group, China Resources Land, China Vanke, Henderson Land, New World Development, Wharf REIC, and Sun Hung Kai Properties advanced between 4% and 6%. 

HSBC Holdings increased 1.6% to HK$63.30 after the bank reported a 56% surge in its annual profit in 2023 to $22.43 billion from $14.83 billion, and income per share increased to $1.15. 

The bank announced a new $2 billion stock repurchase plan and hiked its full-year dividend to 61 U.S. cents from 32 U.S. cents a year ago. 

 

India Stocks Inch Higher Amid Positive Sentiment

Stocks in Mumbai turned up in early trading, and bond yields decreased as investors reviewed the latest report from the Reserve Bank of India. 

The state-of-the-economy report released by the RBI highlighted favorable macroeconomic conditions but urged Indian private sector companies to take advantage of stable interest rates.

The report urged private companies to increase capital expenditure and take advantage of the central government's plan to reduce its borrowing in the current financial year. 

The report also stressed that net interest rate margins for banks are likely to shrink in the coming months as the recent interest rate hikes work through the financial system and force banks to increase deposit and certificate of deposit rates. 

But the report highlighted rising unsecured loans issued by banks to nonbank finance and credit card companies, despite the recent hike in risk capital weights by the central bank. 

The Sensex index increased 15.22 points to 73,072.62, and the Nifty index rose 6.55 points to 22,203.50. 

On the Mumbai stock exchange, 177 stocks traded at their 52-week highs and 4 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds decreased to 7.06%, and the Indian rupee strengthened to ₹82.88 against the U.S. dollar.

Devyani International increased 0.6% to ₹166.20, and Yum Restaurant India plans to sell a 4.4% stake in the company in a block deal with a floor price of 153.50 per share. 

Hindalco Industries gained 0.05% to ₹512.0, and the group company's U.S.-based subsidiary Novelis filed with the U.S. financial regulator to list its stock in New York. 

ABB India gained 0.9% to ₹4,528.85 after the company reported positive quarterly results. 

Revenue in the December quarter rose 35% to ₹2,757 crore, and after-tax income advanced 13% to ₹345 crore from a year ago, respectively.