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Asian Stocks Climb But China Property Crisis Fears Remain

Apparent defaults by China Evergrande and Kaisa Group, whose stock was suspended, cast a cloud over trading floors, but there was positive news over likely impacts of the Omicron Covid variant

Investors were keeping their powder dry ahead of critical US consumer price data due out later on Wednesday.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.66% on Wednesday. File photo: Reuters.


Asian stocks headed up the graph on Wednesday after a strong lead from Wall Street but fears over China’s debt-laden property sector continued to dampen the overall mood.

The main indexes in New York had rallied after worries about the impact of the Omicron coronavirus variant began to fade with doctors claiming its symptoms appeared to be milder than those of the Delta variant.

In Hong Kong, trading in Chinese real estate company Kaisa was suspended just before the opening bell “pending the release by the company of an announcement containing inside information,” according to a filing with the exchange.

Kaisa, China’s 27th-largest property firm but one of its most indebted, became the latest company to worry investors when it announced on Friday that it had failed in a bid for a debt swap that would buy it crucial time.


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China’s real estate sector, a key growth driver in the world’s second-largest economy, has cooled in recent months after Beijing tightened lending and home-buying rules, while launching a regulatory assault on speculation.

The moves have created headaches for many developers, notably China Evergrande, the country’s second-largest by volume, with liabilities said to exceed $300 billion.

On Tuesday, Evergrande missed a deadline to repay some of its overseas creditors, raising the prospect of a default as it prepares for a government-backed mega-restructure, which analysts say could drag on for years.

The Hang Seng Index was up 0.06%, or 13.21 points, to 23,996.87. The Shanghai Composite Index was up 1.18%, or 42.48 points, to 3,637.57, while the Shenzhen Composite Index on China’s second exchange gained by 1.77%, or 43.80 points, to 2,521.29.



Japan’s Economy Shrinks

Japan’s economy shrank 0.9% in the July-September quarter, a slightly larger contraction than a preliminary estimate of 0.8%, latest data by the Cabinet Office showed 10 minutes before the opening bell. 

But the data did not prompt any strong reaction from the market and the benchmark Nikkei 225 index gained 1.42%, or 405.02 points, to end at 28,860.62, while the broader Topix index climbed 0.62%, or 12.39 points, to 2,002.24.

Shanghai and Shenzhen both finished up by more than 1%. Sydney was up more than 1% too, with Wellington gaining 2%. Seoul, Jakarta and Taipei were marginally higher, while Singapore was slightly down. Europe’s top stock markets steadied at the open on Wednesday after surging the previous session.

Wall Street stocks were up for a second straight session on Tuesday, with the tech-rich Nasdaq enjoying a 3% jump.

World stocks and oil had tanked on November 26 when news of the new Omicron variant first flashed across traders’ screens. But after a rollercoaster ride, investors are now optimistic about the outlook in the run-up to Christmas.


Key figures around 0810 GMT

Tokyo > Nikkei 225: UP 1.42% at 28,860.62 (close)

Hong Kong > Hang Seng Index: UP 0.06% at 23,996.87 (close)

Shanghai > Composite: UP 1.18% at 3,637.57 (close)

New York > Dow: UP 1.4% at 35,719.43 (close)

London > FTSE 100: UP 0.2% at 7,350.56


  • AFP with additional editing by Sean O’Meara


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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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