US-listed Chinese stocks on track for best month in a year
MAINLAND CHINA & HONG KONG
US-listed Chinese stocks are bouncing back from this year’s bruising selloff as investors hunt for bargains in the wake of Beijing’s corporate crackdown.
The Nasdaq Golden Dragon China Index gained 1% on Wednesday (20 October), extending its surge in October to 13%, set for its best month since June 2020. The benchmark has been hammered this year amid China’s clampdown that has gone after everything from tech giants to after-school tutoring firm and is still down about 25% in 2021.
More investors are speculating that the worst of Beijing’s changes are over and China’s Internet companies are cheap compared with tech stocks elsewhere in the world. At a meeting of Communist Party officials on Monday, Chinese President Xi Jinping said the nation needs to boost innovation in core technologies and step up research, according to the official Xinhua News Agency.
There are also signs the government will step up efforts to limit the fallout from China Evergrande’s (3333 HK) liquidity crisis. In recent days officials from the People’s Bank of China have said they can “contain” the risk from the embattled developer and called the situation “controllable”. Evergrande said Wednesday that it had applied to resume trading of its shares on the Hong Kong Stock Exchange (388 HK) on 21 October.
The rapid rebound in US-listed Chinese stocks comes alongside a similar rally by their peers that trade in Hong Kong. The Hang Seng China Enterprises Index has climbed more than 10% since closing at a five-year low on 6 October, making it the top performing major global benchmark over that span. Analysts have started to change their tune as well, with some turning bullish on the group saying tighter economic regulation has been priced. – Bloomberg News.
The Shanghai Composite Index fell 0.17% to 3,587.00 while the Hang Seng Index climbed 1.35% to 26,136.02.
REST OF ASIA
Global demand for products made by Taiwanese companies defied regional headwinds and predictions of a slowdown as export orders accelerated to a record last month.
Export orders grew 25.7% in September to an all-time high of USD62.9b, the Taiwan economics ministry said in a statement Wednesday (20 October). Economists had forecast growth to slow to 17%, according to the median estimate in a Bloomberg survey.
The continued growth comes despite several headwinds for producers in the region. Power shortages in China forced factories to curb or halt output in September, with the tight energy supply expected to continue through the rest of the year. Despite Beijing’s efforts to increase output from its coal mines, limits on electricity supply to industry could last through the winter months, especially if power is reserved to heat homes.
Almost a third of the orders were from US companies, followed by Chinese and Hong Kong firms. Orders from Europe surged 53% from a year ago to USD13.5b.
The stronger-than-expected expansion is expected to be echoed in trade data across the region. South Korea’s exports for the first 20 days of October likely grew about 30%, according to Bloomberg Economics. That data will be released Thursday. – Bloomberg News.
The Taiwan Stock Exchange Weighted Index fell 0.08% to 16,887.82 on Wednesday.
Australia’s S&P/ASX 200 Index was little changed on Thursday morning. It rose 0.53% to 7,413.70 on Wednesday.
South Korea’s Kospi Index rose 0.12% to 3,016.79 at the open on Thursday, after falling 0.53% to 3,013.13 on Wednesday.
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