Asian Stocks Rally as Focus Turns to China’s Party Congress
(Bloomberg) — Asian equities snapped a five-day losing run, tracking a rally in US peers, with investors looking to China’s twice-a-decade Party Congress for policies to help revive its economy and markets.
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The MSCI Asia Pacific Index rebounded from more than a two year low to gain 1.9%, led by technology and financial shares. Equity benchmarks in the heavyweight markets of China and Japan were among the biggest gainers.
Friday’s surge aside, uncertainties remain high over China’s outlook with investors preparing to parse policy signals from the Congress, which starts on Sunday. Inflation in China remained relatively subdued in September as lockdowns continued to impact spending habits, latest figures showed.
Meanwhile, US consumer prices rose 8.2% year-on-year, data showed on Thursday, cementing expectations the Federal Reserve will roll out another outsized interest-rate hike at its upcoming meeting. Still, the S&P 500 roared back from losses, with dip buyers helping stage the dramatic rebound.
Read: Hot Inflation Torches Bears in a Stock Reversal for the Ages
“The question after such as big counter move, driven largely by a position adjustment, poor liquidity and changes in hedging flow, is whether the market builds on this,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “The lesson once again is that flow drives markets and we must be dynamic to react to the moves.”
Asia’s stock benchmark was still set for a weekly loss of more than 2%. The gauge is hovering near the lowest levels since April 2020 as investors continue to grapple with the prospect of faster rate increases, China’s Covid-Zero policy and rising geopolitical tensions.
In a sign of jittery sentiment, Hong Kong’s stock benchmark pared earlier gains of nearly 4% to end 1.2% higher.
“The main consideration for markets will be once the Party Congress is out of the way, if China will renew its crackdown on tech, property and other relevant industries,” according to Ales Koutny, emerging markets portfolio manager at Janus Henderson Investors. “The trade-off between economic focus, market openness versus a shared wealth agenda will be incredibly important for China growth prospects.”
SECTORS TO WATCH:
Japanese restaurant-related stocks extended gains in late afternoon trading on report the Tokyo Metropolitan Government will resume the “Go to Eat” voucher program from Oct. 26
Shares of Asian companies with revenue from Europe gained following a Bloomberg report that UK Prime Minister Liz Truss’s administration is preparing to abandon a central part of its tax-cutting agenda amid market turmoil.
Chinese chip equipment makers were mixed on Friday after a US official said the Biden administration is also restricting the export of items that will be used to develop or produce indigenous semiconductor manufacturing equipment in China
Asian airline stocks followed their US peers higher after Delta Air Lines said it sees profit in the final months of the year outpacing Wall Street’s expectations
MARKETS AT A GLANCE
MSCI Asia Pacific Index up 1.9%
Japan’s Topix index up 2.4%; Nikkei 225 up 3.3%
Hong Kong’s Hang Seng Index up 1.2%; Hang Seng China Enterprises up 1.2%; Shanghai Composite up 1.8%; CSI 300 up 2.4%
Taiwan’s Taiex index up 2.5%
South Korea’s Kospi index up 2.3%; Kospi 200 up 2.4%
Australia’s S&P/ASX 200 up 1.7%; New Zealand’s S&P/NZX 50 up 0.5%
India’s S&P BSE Sensex Index up 1.6%; NSE Nifty 50 up 1.6%
Singapore’s Straits Times Index up 0.3%; Malaysia’s KLCI Index up 1%; Philippine Stock Exchange Index up 0.2%; Jakarta Composite Index down 1%; Vietnam’s VN Index up 1%
Longi Green jumped 8.9% after the company posted third-quarter earnings that beat Citigroup’s estimates
Ryohin Keikaku soared 7.7% after the Japanese retailer and Muji owner posted 4Q operating profit that beat estimates
Taiwan Semiconductor Manufacturing Co. rose 4.3% after it reported third-quarter earnings that beat expectations
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