Asia report: Mixed session amid focus on China's banks and household debt

Oliver Haill WebFG News | 16 Aug, 2017 15:19 - Updated: 15:19 | | |


Asian stocks markets diverged on Wednesday morning, with Japan's Nikkei and several China-focused indices in the red but the Hang Seng and ASX both moving higher as North Korean tensions abated.

The benchmark Shanghai composite index finished down 0.15%, its first loss this week, although the more tech heavy and smaller-cap focused Shenzhen Composite was up 0.59%.

Hang Seng closed up 0.86%, while in Sydney the ASX 200 added 0.48%, while the MSCI Asia Pacific was up 0.05%.

The Hong Kong index was lifted as Tencent made gains ahead of its second-quarter earnings scheduled for release after the close, while Chinese banks were boosted by expectations that the government will pump more liquidity into the banking system.

The People's Bank of China will inject a net 180 billion yuan ($26.9 billion) into the nation's money markets Wednesday, Reuters reported.

Goldman Sachs noted that a recent rotation "away from shadow bank to traditional banking financing in recent months as a part of the government's attempt to control shadow banking related risks and leverage while maintaining growth stability".

Ahead of the Communist Party's five-year planning meeting this autumn, the US bank told clients: "We expect the authorities to fine tune policy stance on a real-time basis to ensure growth stability, at least before the end of the Party Congress."

Earlier, the IMF revised up China’s growth outlook from last year’s report but took a cautious note on rising levels of non-financial sector debt.

The IMF calculating growth between 2017 and 2021 will average 6.4%, up from 6% previously, bumping up its estimate partly because China is seen as continuing its transition to a more sustainable growth path and economic reforms have been wide ranging. The agency also noted that given the solid growth momentum, now is the time to intensify deleveraging and boost domestic consumption.

However, the IMF forecast that household, corporate and government debt will continue to surge, up from 242% of GDP in 2016 to close to 300% by 2022, which raises concerns for a possible sharp decline in growth in the medium term.

Also, data on foreign direct investment in China released by the Ministry of Commerce showed a decline of 1.2% for July, worse than the 0.1% decline in June.

Down Under, Westpac's leading index, which tracks nine gauges of economic activity in Australia, showed a rise of 0.12% in July from a 0.15% fall last time.

More news

17 Nov Europe close: Stocks slip going into the weekend

Stocks reversed early gains as investors opted to play it safe going into the weekend and the euro edged a tad higher on the back of the political gyrations on Capitol Hill.

17 Nov Europe open: Stocks start slightly higher, analysts wary

Stocks have started the morning trading slightly higher, tracking overnight gains on Wall Street but analysts are worried about buying into Thursday's bounce.

17 Nov London close: Stocks finish week on down note

London's top flight index slipped on Friday, but managed to finish well-off its lows of the session despite renewed Brexit angst as the pound gave back early gains.

17 Nov Kingfisher gets RBC upgrade as 'reasons to be cheerful' in France

DIY retailer Kingfisher has more "reasons to be cheerful" thanks to an improving French outlook, analysts at RBC Capital Markets said on Friday, while clothes seller Supergroup remains "compelling" but its shares have gained a lot in recent weeks.

17 Nov NAV on the rise as Alpha Real Estate Trust turns focus to build-to-rent market

Real estate investment group Alpha Real Trust saw its net asset value (NAV) rise in its first half of trading as it moved to make further investments in build-to-rent projects.

17 Nov Pacific Industrial & Logistics completes sale of Bedford asset

Industrial and logistics-focussed real estate investment trust Pacific Industrial & Logistics has completed the sale of an asset located at Hammond Road, Bedford, for a total consideration of £5.8m, it announced on Friday.

17 Nov DP Poland cuts ribbon on 50th Polish Domino's store

DP Poland, which holds the exclusive master franchise for the Domino’s Pizza brand in Poland, celebrated the opening of its 50th location in the country on Friday.

17 Nov Mercia Technologies makes new investment into Aston EyeTech

National investment group Mercia Technologies has made a new direct investment into Aston EyeTech - a spinout from Aston University, Birmingham - which has developed a range of proprietary hardware and software products in ocular care, it announced on Friday.

17 Nov SimiGon receives final approval for $2m Israeli Air Force order

Modelling, simulation and training solutions provider SimiGon has now received final regulatory approval for a $2m purchase order received from the Israeli Air Force, initially announced on 20 June 2016, it confirmed on Friday.

17 Nov Agriterra losses grow after 'subdued' interest in corn products

Agricultural investment group Agriterra saw losses widen in the first half of its trading year as subdued demand for its maize flour products slashed revenues by more than a third.