Asian shares rise despite Chinese property sector woes

by Jonathan Adams
Asian shares

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1 per cent higher, and is 4.3 per cent higher so far this month

Asian share markets rallied on Thursday and the dollar strengthened, even as global investors again sold off the troubled mainland Chinese property sector.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1 per cent higher, and is 4.3 per cent higher so far this month.

The yield on benchmark 10-year Treasury notes was 4.4902 per cent compared with their U.S. close of 4.508 per cent on Wednesday.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, reached 4.9277 per cent compared with a U.S. close of 4.936 per cent.

Australian shares were 0.26 per cent higher, while Japan’s Nikkei stock index added 1.53 per cent.

Hong Kong’s Hang Seng Index reversed an early gain and was 0.25 per cent lower in the afternoon while China’s bluechip CSI300 Index was up 0.1 per cent.

China’s troubled property sector is being closely watched on Thursday after most major stocks rallied one day back after a Reuters report that Ping An Insurance Group had been asked by the country’s authorities to take a controlling stake in Country Garden Holdings.

A spokesperson for Ping An said the firm had not been approached by the government and denied the Reuters report that cited four sources familiar with the plan.

The Hang Seng Mainland Properties Index lost 3.73 per cent on Thursday and the Hang Seng Properties Index, which covers Hong Kong developers, was 0.7 per cent lower.

I think for equities investors, they are still shying away from Chinese property because there are so many unknowns, said Jason Lui, BNP Paribas’s Head of APAC Equity & Derivative Strategy.

It is difficult to ask investors to go back to pre-property downturn days, fundamentally property is going to play a very different role in Chinese economic development going forward, Lui added.

Lui said: Property needs to stop being a drag on gross domestic product and sentiment so investors can move on to the real growth drivers.

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