BCN-01 China stocks suffer in thin holiday trade





China stocks suffer in thin holiday trade

TOKYO, April 22, 2019 (BSS/AFP) – Chinese stocks closed lower Monday on speculation authorities would limit monetary policy easing after signs of stabilisation in Asia’s top economy but trade was lacklustre with many markets closed for Easter.

After initially opening on a positive footing, the benchmark Shanghai Composite Index closed down 1.70 percent, or 55.76 points, to close at 3,215.04.

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, was off 1.51 percent.

The weakness came after the Politburo, China’s top decision-making body, said on Friday the government would continue to implement a proactive fiscal policy and a prudent monetary policy that is neither too tight nor too loose.

Investors had interpreted that as meaning “that the government will suspend the easing of monetary policy,” said Shen Zhengyang, an analyst at Northeast Securities.

“Large caps like financials and the real estate sectors suffered big losses today accordingly,” he added.

Real estate property firm Vanke dived more than six percent and China Construction Bank was lower by more than three percent.

Japanese stocks went the other way — opening lower but closing higher although volumes were thin ahead of an unprecedented 10-day market closure in Japan to celebrate the enthronement of a new emperor on May 1.

The benchmark Nikkei 225 index rose 0.08 percent while the broader Topix index was up 0.10 percent.

Hideyuki Ishiguro, strategist at Daiwa Securities, said there was a lack of “fresh market-moving events” driving trade early Monday.

And investors are looking “to take profit ahead of 10 days of holidays during which key Chinese and US economic data are due,” Ishiguro said.

Traders may also be holding fire as they await a two-day meeting of the Bank of Japan later in the week. Some companies, including gaming giant Nintendo, are also unveiling their latest results.

Precision motor maker Nidec is reporting on Tuesday and industrial robot maker Fanuc the day after, noted Ishiguro, who added that investors would also be scrutinising results from US IT giants Amazon and Microsoft later this week.

“Some investors bought back shares in firms expected to announce positive results,” Toshikazu Horiuchi, a broker at IwaiCosmo Securities, told AFP.

In other individual Japanese stocks, Toyota rose 0.07 percent to 6,963 yen as Nissan gained 0.55 percent to 944.5 yen amid news its former chairman had been slapped with a fourth charge of financial misconduct.

Nintendo was down 1.63 percent at 38,560 yen ahead of their results on Thursday.

– ‘Cheap and plentiful money’ –

Turning to foreign exchange markets, Resona Bank said in a commentary that trade was affected by the holidays.

The dollar-yen rate was flat, with the greenback fetching 111.94 yen in early Asian trade, against 111.91 yen on Friday in Asia.

“Investors welcomed stable foreign exchange rates,” Horiuchi said, adding: “The current levels of the yen are good for exporters.”

Stephen Innes, head of trading at SPI Asset Management, said that a “positive confluence of events continues to support risk sentiment.”

The markets “should remain in a happy place provided the Federal Reserve stays on the dovish course as indeed cheap and plentiful money has a most soothing effect on equity investors,” he said.

Markets in Hong Kong and Australia were closed for the Easter break while many European and US markets will also not trade on Monday.

Both Brent Crude and WTI oil markets were higher by nearly two percent, as traders await an announcement from the US that it will end its waivers for all countries in its sanctions on oil purchases from Iran.

“A zero import ruling on Iran will bolster global oil benchmarks in the second quarter of 2019,” said Phillip Futures commodities analyst Benjamin Lu.