China Stocks Rise on Reform Hopes
05 July 2016 - 3:30PM
Dow Jones News
Shares in China bucked a slump across Asia early Tuesday, as
Chinese investors became more hopeful about President Xi Jinping's
calls for state-owned enterprise reform.
Japan's Nikkei Stock Average fell 0.9%, Australia's S&P/ASX
200 dropped 1%, and Korea's Kospi lost 0.3%. Hong Kong's Hang Seng
Index was down 0.7%. China's Shanghai Composite Index, however,
gained 0.6%.
In most of Asia, caution before a key U.S. jobs report Friday
kept investors from making big bets, analysts said. Last month's
release of starkly weak May jobs figures shook up markets, with
traders concerned about the health of the U.S. economy.
This time investors are heading into the jobs data braced for
surprises, and will "focus on consolidating portfolios rather than
on taking on more risk," Citigroup strategist Siddharth Mathur
said.
In China, however, stocks rose on the hope that the government
was serious about state-owned enterprise reform, and on
expectations of increased military spending as tension sin the
South China Sea continue to simmer. President Xi Jinping, in an
official Xinhua News Agency article late Monday, called for efforts
to enhance the competitiveness and efficiency of state-owned
companies. State-owned China National Complete Plant Import &
Export Corp. was up 6.4%, and Luoyang Glass Co. jumped 5.3%.
Meanwhile, mainland-listed shares of China's largest home
builder, China Vanke Co. Ltd., sank 10% for the second day in a
row, hitting the limit on how far share prices can move in one day
in China. Shares had resumed trading Monday after a six-month halt.
Investors continued to sell Tuesday amid concerns over a potential
asset swap deal that will dilute shares. The asset swap is designed
to thwart a hostile takeover that is in progress.
Elsewhere, Japanese stocks fell while the yen moved stronger in
the morning to last trade at 102.17 to one U.S. dollar. A strong
yen increases the costs and weakens the foreign-currency returns of
exporters and manufacturers.
In Australia, stocks extended Monday's losses as officials
continued counting votes following the weekend's inconclusive
federal election results. Traders are worried about a hung
parliament, which would create political gridlock. Investors are
also cautious ahead of the Reserve Bank of Australia's
interest-rate decision due later Tuesday.
A slight decline in the price of Brent crude oil Tuesday morning
to below $50 a barrel, a psychologically important level, also
suppressed shares of oil producers in Asia. Australia's Woodside
Petroleum Ltd. slipped 0.45%, the Chinese state-owned China
Petroleum & Chemical Corporation fell 1.6% in Hong Kong, and
Idemitsu Kosan Co. Ltd. lost 1% in Japan.
In other markets, Chinese authorities guided the yuan 0.2%
weaker versus the U.S. dollar, compared with Monday's benchmark.
The yuan's daily midpoint was fixed at its weakest level to the
dollar since 2011.
Ewen Chew, Kosaku Narioka, Yifan Xie, Esther Fung and Robb
Stewart contributed to this article.
(END) Dow Jones Newswires
July 05, 2016 01:15 ET (05:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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