ASIA MARKETS: Chinese Stocks Rise, Push Past 1st China Credit Downgrade In Nearly 30 Years
May 24 2017 - 11:07PM
Dow Jones News
By Kenan Machado
Kospi at record; Nikkei gains
Chinese stocks closed higher Wednesday, shaking off losses as
initial concerns wore off from Moody's Investors Service's decision
to lower the country's credit rating for the first time since
1989.
Equities fell more than 1% in early trading in both Shanghai and
Shenzhen, with the downgrade reminding investors of China's
continued growth in outstanding borrowings--especially among
companies.
Read:Moody's downgrades China rating for the first time in
nearly 30 years
(http://www.marketwatch.com/story/moodys-downgrades-china-rating-for-the-first-time-in-nearly-30-years-2017-05-24)
But the declines soon eased, and the Shenzhen Composite Index
finished up 0.5%. The Shanghai Composite finished up 0.1%.
"I don't think [the downgrade] came as a surprise to people
invested in China," said Hao Hong, head of research at BoCom
International in Hong Kong.
Chinese authorities have started pushing entities to cut debt
levels, particularly targeting loans made by nonbank firms with
little regulatory oversight. The push has hurt Chinese asset
prices.
Nomura equities strategist Wendy Liu noted global fixed-income,
currency and commodity investors are more concerned about targeted
interbank financial deleveraging than equity investors. Even so,
there were muted movements in other asset classes as well.
In Hong Kong, the Hang Seng logged a 0.1% rise.
The ratings downgrade also came about a month before MSCI Inc.
announces whether to include Chinese-listed stocks into its
indexes. Finally getting a yes on that could send equities there
jumping as money enters the market from the likes of large
index-tracking funds.
The ratings cut has raised some concern Chinese firms may face
higher overseas borrowing costs, forcing them to raise more
financing at home and squeeze market liquidity.
Elsewhere in Asia, shares ended mostly higher.
An overnight rebound in the dollar versus the yen helped send
Japan's Nikkei Stock Average up 0.7%. Meanwhile, Korea's Kospi rose
0.2% to end at an all-time of 2,317.34.
Taiwan's Taiex rose 0.4%, but India's Sensex fell 0.7%.
Australian stocks finished with a 0.2% rise. Equities there sold
off briefly following the China downgrade, but the impact was
largely been confined to the Australian dollar , which fell some
0.5% against major currencies in Asian trading.
China is the largest market for Australian exports, but
near-term worries are unwarranted, said Greg McKenna, chief market
strategist at AxiTrader. "China has got control of its capital
account," he said, noting that the level of the country's economic
growth is more important to Australia than its credit rating.
(END) Dow Jones Newswires
May 24, 2017 22:52 ET (02:52 GMT)
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