Chinese stocks rose sharply Thursday, catching up to a rally in global equities after the market was closed for a week-long holiday.
A number of other markets in Asia fell, amid concerns about a slowdown in emerging markets
The Nikkei 225 index ended its streak, losing 181.81 points, or 1%, to 18,141.17, coming off a six-day winning streak that had taken it to its highest level in almost one month.
The Hang Seng index in Hong Kong lopped off 160.85 points, or 0.7%, to 22,354.91
Japanese core machinery orders unexpectedly fell as concerns over an economic slowdown in China sap companies’ appetite for new investment. The downbeat figures came after a decline in German industrial production figures on Wednesday that added more evidence of weakening exports to emerging markets.
The International Monetary Fund also warned that troubles in emerging markets could risk asset fire sales and curtail growth in rich countries.
The region’s currencies also lost some momentum, with the Australian dollar down 0.3% against the U.S. dollar, ending a six-day rally.
Hopes that the U.S. Federal Reserve would hold off on raising interest rates had quieted fears about outflows from emerging markets, fueling steep gains in some of their currencies earlier in the week.
Australia’s equities market notched a fourth straight day of gains, putting it on track for its biggest weekly advance since mid-July, as resources stocks continued to climb after a recovery in some commodity prices. The S&P/ASX 200 finished 0.2% higher, bringing the rise for the week so far to 3.1%.
CHINA
The CSI 300 in Shanghai returned after a lengthy holiday to gain 93.53 points, or 2.9%, to 3,296.48
Small to midcap stocks are still trading at expensive levels but overall the mainland market has fallen to trade at a ratio of 11 times price-to-earnings on a market-capped basis, making it more attractive for investors. Margin financing, the money from local brokerages that helped the market rally, has also unwound, falling nearly 60% from its peak in June
The onshore Chinese yuan hit its strongest level since its August devaluation, at 6.35 to the U.S. dollar, guided by China’s central bank.
That compares to 6.3571 before the holiday began. The bank’s daily fixing of the yuan against the U.S. dollar, from where the currency can trade 2% higher or lower, was set at 6.3505, also the strongest since the devaluation.
On Wednesday, the deputy governor of China’s central bank, Yi Gang, sought to allay fears of a deep economic slowdown in China, saying continued growth would stabilize the country’s currency and allow the central bank to let it move according to market forces.
Data showed that China’s foreign exchange reserves dropped by $43.26 billion U.S. in September compared with $93.93 billion U.S. in August. The trend signals the country’s central bank could step up monetary easing, which could a positive for markets.
A hands-off approach could cause more depreciation in the yuan, also known as the renminbi, should the Chinese economy weaken further. But "fundamentals" such as China’s strong trade surplus would ensure the yuan’s strength, Yi said.
In other markets
In Korea, the Kospi index added 13.69 points, or 0.7%, to 2,019.53
In Taiwan, the Taiex Index fell 49.27 points, or 0.6%, to 8,445.98
In Singapore, the Straits Times Index faded 14.78 points, or 0.5%, to 2,947.03
The NZX 50 eased 24.25 points, or 0.4%, to 5,625.78
The ASX 200 Index moved up 12.53 points, or 0.2%, to 5,210.40
