Monday, February 10, 2014

Asia Mostly Higher; China Services PMI Falls

Asia stock markets were mostly higher as China reopened after an extended Lunar New Year break.

China stocks were little changed as markets reopened after the Lunar New Year break. With a lack of local leads, markets looked beyond China’s borders for clues. With most Asian markets in wait-and-see mode ahead of the US monthly non-farm payrolls data released late Friday, stocks fell before recouping losses by midday. A falling HSBC services PMI failed to dent equities. The January number of 50.7 was slightly lower than December’s 50.9, but remained in expansionary territory. China’s official PMI reading for January is 53.4. Elsewhere, the People’s Bank of China said some volatility in money-market rates must be tolerated as reins in credit growth. The central bank said it would not bankroll a model based on investment and debt.

Hong Kong’s Hang Seng was up 1%, marking two straight days of gains, but still ended lower for the week. Markets are expected to be choppy this week with several data points for China due. January trade data is due Wednesday while Beijing is set to unveil credit and lending numbers sometime this week.

In Southeast Asia, Singapore’s STI closed 0.8% higher, taking its cue from Wall Street overnight. On Friday, Singapore Exchange and the Monetary Authority of Singapore said broad reforms to securities trading rules and enforcement were set to begin in March. The SGX will issue “trade with caution” warnings on stocks with unusual trade activity and companies are required to maintain a list of people who have knowledge of any M&A-related activity. Malaysia’s KLCI rose 0.6% as exports in December rose 14.4%, handily beating expectations for a 9% increase. Indonesia’s JCI meanwhile, climbed 1% after Bank Indonesia governor Agus Martowardojo said Indonesia’s inflation should moderate in the second half of 2014 and closer to BI’s target of between 3.5-5.5%. Inflation in January came in at 8.22%.

India’s Sensex added 0.3% despite the government’s prediction that the economy would expand less than 5% until the fiscal year ends.