China developers rally
MAINLAND CHINA & HONG KONG
Chinese developers led stock gains in Shanghai and Hong Kong after regulators said their funding needs are being met, soothing concerns over policies that have made industry giants like China Evergrande Group (3333 HK) suffer.
Property shares were the best performers in the two financial hubs, with gauges tracking the sector adding at least 2% Thursday (21 October). Longfor Group Holdings (960 HK) rose 7.6% at the close while China Resources Land (1109 HK) added 3.5%, among the top contributors to the Hang Seng Index.
On Thursday, an official at the China Banking and Insurance Regulatory Commission dismissed concerns that the Evergrande crisis will have any major impact on the credit profile of the sector, echoing a view expressed by the central bank last week (ended 15 October).
The regulators’ comments “reaffirmed our view that the ‘darkest hour’ for the sector is over”, analysts wrote in a Wednesday note. Banks’ granting of mortgages and loans for developers are picking up and other policies may improve such as the deferral of developers’ payment of funds for land purchases, they added. – Bloomberg News.
The Shanghai Composite Index added 0.22% to 3,594.78 while the Hang Seng Index fell 0.45% to 26,017.53.
REST OF ASIA
Strong gains in South Korea’s exports this month suggest global demand is holding up despite headwinds from supply chain snags and an energy crunch disrupting Chinese production.
Overall shipments grew 36.1% in the first twenty days of the month from a year earlier, data from the customs office showed Thursday (21 October). Sales to China jumped 30.9%, indicating that South Korea’s biggest trade partner still has solid demand for parts and components.
The report suggests the recovery in global commerce has yet to be derailed even as extended lead times and surging energy prices pose challenges to manufacturers. Daily average exports, a reading that removes calendar distortions, rose 25.7% during the period, which had one more business day compared with a year earlier.
Still, a slowdown that looks set to deepen in China clouds the outlook and could mean weaker orders from consumers and businesses in the world’s second largest economy. Economists have been lowering forecasts for China’s growth for this year, expecting the power crunch to persist into the final quarter.
The Bank of Korea (BOK) will be closely monitoring the trade figures as it decides whether to push ahead with a November rate hike it has signalled.
Slower growth in China, supply chain disruptions, and moderating global demand may bring double digit gains back to earth in the months ahead, but we expect the export sector – and especially the electronics sector – to remain a key source of support for the economy’s recovery into 2022
South Korea’s strong trade performance has allowed the BOK to shift its focus to managing financial risks, initiating a rate hike cycle in August. – Bloomberg News.
South Korea’s Kospi Index was flat at 3,007.43 at the open on Friday, after falling 0.19% to 3,007.33 on Thursday.
Australia’s S&P/ASX 200 Index 0.15% lower at 7,404.20 on Friday morning, after gaining 0.02% to 7,415.40 the previous session.
The Taiwan Stock Exchange Weighted Index was little changed at 16,889.51 on Thursday.
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