Asian stocks trade mixed, China stocks lead gains on stimulus measures
30.09.2024, 07:06

Asian stocks trade mixed, China stocks lead gains on stimulus measures

  • Asian equities trades were mixed on Monday. 
  • Chinese stocks close sharply higher due to Beijing's stimulus measures.
  • Nikkei was down over 4.80% after Ishiba won the LDP election. 

Asian stock markets trade mixed on Monday. The Chinese stocks lead gains on more policy measures in China, while the concerns Japan's new Prime Minister favores normalizing interest rates weigh on Japanese stocks

Traders continue to react to the additional stimulus measures from the People's Bank of China (PBoC) to spur growth in the world's second-largest economy. Meanwhile, China’s Shanghai Composite rose by 8.75% to 3,357.20. Meanwhile, the Shenzhen Component climbed by 10.88% to 10,550, and the Hang Seng Index was up by 3.97% to 21,450. 

Data released on Monday showed that China’s NBS Manufacturing Purchasing Managers' Index (PMI) rose to 49.8 in September from 49.1 in August, above the market consensus of 49.5 in the reported month. The Non-Manufacturing PMI declined to 50.0 in September versus August’s 50.3 figure and the estimates of 50.4. Additionally, Caixin Manufacturing PMI declined to 49.3 in September after reporting 50.4 in August. Finally, Chinese Caixin Services PMI dropped sharply to 50.3 in September from 51.6 in August. 

Japan’s major indices face a sell-off on the day after the prime minister election, with the Nikkei 225 falling by 4.80% to 37,919, while the broad-based Topix was down 3.63% to 2,641. Shigeru Ishiba said Japan's monetary policy needs to be normalized and that financial income tax should be increased.

On the Indian front, the Nifty 50 index declined by 1.02% to 25,912 and the BSE Sensex 30 fell 1.12% to 84,630. The Indian rupee has remained largely stable against the USD in the current calendar year (CY 2024), depreciating by just 0.59% so far.

On Friday, Chief Economic Advisor (CEA) V Anantha Nageswaran noted that the Indian economy is projected to grow at a rate of 6.5-7.0% in the current financial year on a steady-state basis.

AsianStocks FAQs

Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.

Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.

Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.

Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.

 

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