Asia Stocks Struggle Over Delisting, Fed Rates Fears

 

Asia’s major markets endured a mixed day to end the week with Hong Kong retreating, while Tokyo bucked the trend to see a ninth consecutive positive day.

China and Hong Kong stocks were weighed down by concerns over hawkish comments from top Federal Reserve officials and US delisting risks for Chinese companies.

The US public company accounting regulator said on Thursday it continued to engage with Chinese regulators about getting access to their auditors’ records, but the question of whether the Chinese government would grant the access required by a new US listing law remained unclear.

 

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China’s securities regulator said this month it was confident it would reach an agreement with US counterparts on securities supervision, after US-listed Chinese stocks tumbled as the first Chinese firms to be potentially delisted were named.

And Chicago Fed President Charles Evans said on Thursday the Fed needed to raise interest rates “in a timely fashion” this year and in 2023 to curb high inflation before it was embedded in US psychology and became even harder to get rid of.

The Hang Seng Index sank 2.47%, or 541.07 points, to 21,404.88. The Shanghai Composite Index dropped 1.17%, or 38.02 points, to 3,212.24, while the Shenzhen Composite Index on China’s second exchange shed 1.43%, or 30.61 points, to 2,113.73.

Tech giants listed in Hong Kong fell 5%, with Meituan and Alibaba Group down 8.2% and 5.6%, respectively. Healthcare firms trading in the city gave up 7%. 

The blue-chip CSI300 index fell 1.8% to 4,174.57 and the China Enterprises Index was 3.2% lower at 7,283.92 points.

 

Nikkei Rallies, Nifty 50 Falls

Tokyo’s key Nikkei index ended higher for a ninth straight day on Friday after US rallies, but gains were limited due to profit-taking and losses of Asian shares.

The benchmark Nikkei 225 index was up 0.14%, or 39.45 points, to end at 28,149.84, while the broader Topix index was flat, inching down 0.09 points to 1,981.47.

Indian stocks dropped with Mumbai’s signature Nifty 50 index down 0.40%, or 69.75 points, to close at 17,153.00.

Last week, Chinese Vice Premier Liu He said Beijing would roll out support for the domestic economy and financial market. The statement initially sent Chinese and Hong Kong stocks higher.

After the speech, Citi analysts said in a note, “Some actions have been taken by different agencies but the market is still waiting for more concrete actions in monetary, ADRs, real estate, big tech, etc.”

 

Global Bonds Selloff

Surging Covid-19 infections also dented sentiment. China reported 1,366 confirmed cases and 3,622 asymptomatic ones for Thursday.

Mainland-listed healthcare, new energy and machinery shares closed between 3% and 3.4% lower, while consumer staples lost 1.7%, tourism stocks dropped 2%, and transport companies fell 2.7%.

For the week, the CSI300 Index declined 2.1%, while the Shanghai Composite Index was down 1.2%. The China Enterprises Index dropped 1.1% and the Hang Seng index was almost flat.

Global bond markets were still in the grips of one of their worst selloffs in recent memory, while gauges of market volatility threw mixed signals. Nickel, the face of market volatility, climbed 9% on Friday after hitting the 15% daily trading limit in the previous two sessions.

Benchmark US ten-year Treasury yields, which have led the broader bond market selloff, held at 2.34% on Friday after hitting a near three-year peak of above $2.41% this week. Yields have risen 75 bps in the past two weeks as traders scrambled to revise their rate hike expectations.

Spot gold remained elevated at $1,959 an ounce, steady on the day.

Oil continued to slide a little on Friday, as the United States and allies considered releasing more oil from storage to cool markets. Brent crude fell 1.3% to $117.78 per barrel and US crude down 1.6% to $110 a barrel, but prices were still very high by historic standards.

 

Key figures around 0820 GMT

Tokyo – Nikkei 225 > UP 0.1% at 28,149.84 (close)

Hong Kong – Hang Seng Index > DOWN 2.5% at 21,404.88 (close)

Shanghai – Composite > DOWN 1.2% at 3,212.24 (close)

London – FTSE 100 > DOWN 0.1% at 7,459.79

Brent North Sea crude > DOWN 1.2% at $117.56 per barrel

West Texas Intermediate > DOWN 1.4% at $110.80 per barrel

New York – DOW > UP 1.0% at 34,707.94 (Thursday close).

 

• Reuters with additional editing by Sean O’Meara

 

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