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China stocks lead Asia rebound on coronavirus stimulus bet
Hudson Lockett in Hong Kong 38 MINUTES AGO
US Treasury yields slid to new lows in Asia while stock markets rebounded as investors pinned their hopes on central banks unleashing a wave of easing measures to cushion the economic hit from the coronavirus outbreak.
Japan’s Topix was up 1.1 per cent on Monday afternoon, while China’s CSI 300 of Shanghai- and Shenzhen-listed stocks had gained 3.2 per cent — on pace for its best one-day performance since June.
The gains came after the Bank of Japan signalled that it would inject liquidity into the financial system and hinted at increased asset purchases. The BoJ “will closely monitor future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases,” Haruhiko Kuroda, the central bank governor, said in a statement.
S&P 500 futures added 0.6 per cent, while contracts for London’s FTSE 100 stock benchmark were up 2.2 per cent.
The brighter mood also buoyed crude oil, with the price of Brent, the international marker, climbing 3.2 per cent to $51.28 a barrel.
Equities initially sold off across Asia after China’s official manufacturing purchasing managers' index at the weekend showed factory activity plunged to an all-time low in February, as the coronavirus knocked swaths of economic activity offline.
In early trading on Monday the yield on 10-year US Treasuries fell as much as 11 basis points to 1.0347 per cent, a new record low, before pulling back to be down 7 basis points. Yields fall as bond prices rise.
After the S&P 500 last week dropped 11 per cent, marking the Wall Street benchmark’s worst week since the global financial crisis, investors are betting that central banks will step in to try and mitigate the crisis that is threatening global economic growth.
“Expectations for the amount of easing from central banks around the world have just gone through the roof,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
Based on trading of Fed funds futures, investors now think it is almost certain that the Federal Reserve will cut interest rates when it meets later this month. Chairman Jay Powell has said the US central bank is “closely monitoring” developments.
“Policymakers want to avoid a more disorderly tightening of financial conditions that could further exacerbate the economic shock,” analysts at Pimco wrote in a note on Monday.
Governments are taking action to support their economies during the outbreak. Italy said it will inject €3.6bn into its economy to mitigate the outbreak’s impact.
Goldman analysts wrote on Sunday that they were forecasting rate cuts of varying magnitudes by central banks from the UK, Canada and Australia to India and South Korea. They now project the Fed will cut rates by 0.5 percentage points in March and another 0.5 percentage points in the second quarter.
China’s onshore-traded renminbi strengthened to 6.9673 per US dollar after the central bank set the midpoint of the currency’s trading band to below seven for the first time in more than a week.
Ken Cheung, chief Asia currency strategist at Mizuho, said traders were betting that a wave of fiscal stimulus by Beijing could soften the blow to the world’s second-biggest economy from the coronavirus.
“Optimism over a China growth recovery in March is being fuelled by the slowing pace of virus contagion and expectation for China’s strong stimulus,” he said.
Additional reporting by Robin Harding in Tokyo
China’s bond market to see inflow of US$20 billion in foreign capital
Published: 7:30am, 2 Mar, 2020
The inclusion of China’s government bonds into JPMorgan Chase and Co.’s benchmark emerging-market indexes has opened a floodgate for a capital inflow of US$20 billion into the mainland’s onshore debt market.
On Friday, China began having a 10 per cent weight in JPMorgan’s Government Bond Index-Emerging Markets (GBI-EM)’s global diversified and narrow diversified indexes.
That marked another milestone for the world’s second-largest debt market worth more than 100 trillion yuan (US$14.3 trillion). Bloomberg Barclays added yuan-denominated bonds to its global benchmark last April.
“The inclusion that helps direct more fund inflows into the bond market represents a win for China as a result of the increasing profile of its economy and currency,” said Gu Weiyong, chief investment officer at Shanghai-based asset manager Ucom Investment. “The economic woes amid the coronavirus epidemic is unlikely to deter international investors from allocating additional funds to buy Chinese bonds.”
Hudson Lockett in Hong Kong 38 MINUTES AGO
US Treasury yields slid to new lows in Asia while stock markets rebounded as investors pinned their hopes on central banks unleashing a wave of easing measures to cushion the economic hit from the coronavirus outbreak.
Japan’s Topix was up 1.1 per cent on Monday afternoon, while China’s CSI 300 of Shanghai- and Shenzhen-listed stocks had gained 3.2 per cent — on pace for its best one-day performance since June.
The gains came after the Bank of Japan signalled that it would inject liquidity into the financial system and hinted at increased asset purchases. The BoJ “will closely monitor future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases,” Haruhiko Kuroda, the central bank governor, said in a statement.
S&P 500 futures added 0.6 per cent, while contracts for London’s FTSE 100 stock benchmark were up 2.2 per cent.
The brighter mood also buoyed crude oil, with the price of Brent, the international marker, climbing 3.2 per cent to $51.28 a barrel.
Equities initially sold off across Asia after China’s official manufacturing purchasing managers' index at the weekend showed factory activity plunged to an all-time low in February, as the coronavirus knocked swaths of economic activity offline.
In early trading on Monday the yield on 10-year US Treasuries fell as much as 11 basis points to 1.0347 per cent, a new record low, before pulling back to be down 7 basis points. Yields fall as bond prices rise.
After the S&P 500 last week dropped 11 per cent, marking the Wall Street benchmark’s worst week since the global financial crisis, investors are betting that central banks will step in to try and mitigate the crisis that is threatening global economic growth.
“Expectations for the amount of easing from central banks around the world have just gone through the roof,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
Based on trading of Fed funds futures, investors now think it is almost certain that the Federal Reserve will cut interest rates when it meets later this month. Chairman Jay Powell has said the US central bank is “closely monitoring” developments.
“Policymakers want to avoid a more disorderly tightening of financial conditions that could further exacerbate the economic shock,” analysts at Pimco wrote in a note on Monday.
Governments are taking action to support their economies during the outbreak. Italy said it will inject €3.6bn into its economy to mitigate the outbreak’s impact.
Goldman analysts wrote on Sunday that they were forecasting rate cuts of varying magnitudes by central banks from the UK, Canada and Australia to India and South Korea. They now project the Fed will cut rates by 0.5 percentage points in March and another 0.5 percentage points in the second quarter.
China’s onshore-traded renminbi strengthened to 6.9673 per US dollar after the central bank set the midpoint of the currency’s trading band to below seven for the first time in more than a week.
Ken Cheung, chief Asia currency strategist at Mizuho, said traders were betting that a wave of fiscal stimulus by Beijing could soften the blow to the world’s second-biggest economy from the coronavirus.
“Optimism over a China growth recovery in March is being fuelled by the slowing pace of virus contagion and expectation for China’s strong stimulus,” he said.
Additional reporting by Robin Harding in Tokyo
China’s bond market to see inflow of US$20 billion in foreign capital
Published: 7:30am, 2 Mar, 2020
The inclusion of China’s government bonds into JPMorgan Chase and Co.’s benchmark emerging-market indexes has opened a floodgate for a capital inflow of US$20 billion into the mainland’s onshore debt market.
On Friday, China began having a 10 per cent weight in JPMorgan’s Government Bond Index-Emerging Markets (GBI-EM)’s global diversified and narrow diversified indexes.
That marked another milestone for the world’s second-largest debt market worth more than 100 trillion yuan (US$14.3 trillion). Bloomberg Barclays added yuan-denominated bonds to its global benchmark last April.
“The inclusion that helps direct more fund inflows into the bond market represents a win for China as a result of the increasing profile of its economy and currency,” said Gu Weiyong, chief investment officer at Shanghai-based asset manager Ucom Investment. “The economic woes amid the coronavirus epidemic is unlikely to deter international investors from allocating additional funds to buy Chinese bonds.”
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