Asian Market Update – Wednesday: Asian Stocks Trade Higher as China Announces New Leadership, ECB Meeting

Politburo standing committee

The Big Question: What can markets expect from the new Chinese leadership?

Most Asian stock indexes were pointing higher during the Asian trading session on Wednesday, as they followed the announcement of the new Chinese leadership line-up in Beijing and a meeting of the European Central Bank scheduled for Thursday.

In China, the Shanghai Composite Index was up 0.13 percent to about 3,392 before midday. In Hong Kong, the Hang Seng Index was up 0.68 percent to around 28,345.

In Japan, the Nikkei 225 added 0.12 percent at around 21,830. The benchmark is now shooting for a 17 day long winning streak, though gains getting smaller.

In South Korea, the Kospi moved up 0.07 percent to around 2,492 shortly before midday.

Down Under, the ASX 200 was up 0.12 percent to around 5,904. Fresh data showed that Australia’s third-quarter consumer prices were surprisingly soft, making it the seventh straight quarter that inflation has undershot the country’s central bank target, reinforcing the case for keeping rates low.

Media attention in Asia is focused on the recent announcement of new members of China’s Politburo Standing Committee, the most powerful group of leaders in the country. The new leadership was presented at a press conference in Beijing around noon local time, after emerging from closed-door elections at the end of the weeklong 19th Party Congress that ended yesterday.

Chinese President Xi Jinping and Premier Li Keqiang were both re-elected for another five-year term in the Standing Committee.

Markets are also paying attention to a meeting of the ECB scheduled for Thursday, looking for cues on monetary policy changes. Analysts, however, say the ECB is expected to be very cautious in their statement, with few clear signs of future direction expected.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 21,830 0.12%
China-Shanghai Composite Index 3,392 0.13%
South Korea-KOSPI 2,492 0.07%
Hong Kong –Hang Seng 28,345 0.68%
Australia-ASX 200 5,904 0.12%

Cryptocurrencies

Prices of the main cryptocurrencies were pointing lower overnight during Asia’s morning trading session on Wednesday.

At midday in Asia, bitcoin was down 1.28 percent to $5,452. Bitcoin has now been stuck in a downtrend for a fourth straight day, falling back from its all-time-high of almost $6,200.

Ethereum also lost 1.87 percent to about $291 before midday. Wednesday morning’s loss nearly erased a major gain seen yesterday, when the virtual currency surged more than 5 percent.

Litecoin was down 1.8 percent to about $54 as of midday in the Asian trading session.

In the News: Central banks appear to have mixed feelings about cryptocurrencies. A Taiwanese central bank official said on Wednesday that anti-money laundering laws should regulate bitcoin trading. On the other hand, Singapore’s central bank chief said his country won’t regulate bitcoin.

Currencies

The Japanese yen gained 0.03 percent against the US dollar at midday Wednesday to 113.86 per dollar.

The Chinese yuan lost 0.11 percent against the US dollar to 6.6408 per dollar.

The Australian dollar also lost 0.62 percent on the dollar, changing hands at 1.2940 per dollar at midday.

Commodities

WTI Oil was down 0.17 percent to $52.41 per barrel.

Brent Crude lost 0.26 percent to $58.36 per barrel.

Gold was down 0.10 percent to $1,274.44 an ounce.

Business News across Asia

In China, US electric carmaker Tesla has confirmed that it will open a factory in Shanghai. Reports said that the factory would be wholly owned by Tesla, making the company the first foreign car company to have a wholly owned operation in China.

Take Away: Chinese regulations require foreign carmakers to partner up with local companies in order to set up an operation in the country. If the Tesla plan goes ahead, it could set a positive precedent for more to follow.

In Japan, Prime Minister Shinzo Abe’s ruling party may have won a majority in parliamentary elections, but half the people said they don’t want him to be the prime minister, a newspaper survey showed. Separately, the Japanese government is reportedly mulling measures to expand tax incentives for companies to boost wages.

Take Away: Though there is little doubt that Abe will remain as prime minister, the opposition appears to be stronger, which could weigh on Abe’s power to push for his policy initiatives in his new term.

Author:
Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.