ASIA MARKETS: Hong Kong Stocks Hit New Milestone, Nikkei Rises Despite Stronger Yen
By Kenan Machado
Hang Seng hits highest level since 2007; liquidity boosts Chinese financial stocks
Asian markets were mostly higher Monday, even in Japan where a stronger yen failed to put a damper on gains.
In Hong Kong, the Hang Seng Index hit its highest intraday level since 2007, surpassing its previous record set on Oct. 25, 2007, according to FactSet. The benchmark was last up 0.8% as index major Tencent Holdings (>> Tencent Holdings Ltd) rebounded.
“The investment sentiment has been improving worldwide especially from the record-breaking streak in the U.S.,” said Ivan Ip, a stock strategist at UOB Kay Hian. Hong Kong stocks are benefiting from that optimism as well as efforts to increase market turnover by lowering taxes on trading, he said.
All three major U.S. stock indexes closed at record highs on Friday on the hope that increases in earnings will justify high valuations. Earnings expectations for 2018 for firms in the S&P 500 index increased by 2.2% from Dec. 20 through Jan. 11 because of the potential benefit from U.S. tax reforms, said John Butters, a senior earnings analyst at FactSet. This was the largest increase over this time frame since the firm began tracking this data in 1996.
In Japan, the Nikkei Stock Average rose 0.2% as some large financial companies continued to benefit from higher bond yields.
Stock benchmarks in Australia , Korea and Singapore were also higher, while New Zealand’s NZX-50 fell 0.3% as major milk exporter stocks turned lower. Synlait (>> Synlait Milk Ltd) and Fonterra (>> Fonterra Co-operative Group Limited) were down nearly 2%.
In China, an index tracking the biggest financial stocks in Shanghai and Shenzhen was up 1.5% as the central bank said it supplied liquidity to the market. Chinese financial stocks have been recently weighed by worries over a sharp reduction in liquidity given policy makers’ crackdown on borrowing.
In foreign exchange markets, the yen hit a four-month high versus the U.S. dollar at Yen110.64, even after Bank of Japan Gov. Haruhiko Kuroda failed to offer anything new for market participants looking for signs of monetary tightening.
Commodity prices have also benefited from a weaker dollar recently.
“Commodity markets are painting a positive picture for shares,” said Michael McCarthy, chief market strategist at CMC Markets. But it isn’t just a currency play.
“The clear evidence of improving activity goes some way to justifying the ongoing global share rally,” Mr. McCarthy said.
Oil futures were down slightly in Asian trading but shares of Australia mining giants BHP Billiton (>> BHP Billiton Limited) and Rio Tinto (>> Rio Tinto plc) hit fresh multiyear highs, rising about 1%.