Chinese Equity Updates
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European stocks continued to gain in China after Beijing’s calls for greater cooperation with Washington helped ease nervousness over regulatory crackdown in the world’s largest emerging market.
The European Stoxx 600 index rose 0.8% on Monday to new all-time highs, while the UK’s FTSE 100 rose 1%, led by economically sensitive stocks including banks and energy groups . London-listed lender HSBC gained 1.6 percent after releasing second-quarter figures that far exceeded analysts’ expectations.
The gains came after the China Securities Regulatory Commission, the market regulator in Beijing, called on Sunday for closer cooperation with Washington, highlighting the country’s efforts to improve transparency and predictability after qu A crackdown on tutoring groups wiped the market value of the industry’s biggest $ 100 billion. companies.
Chinese listings in the United States have become a geopolitical flashpoint as Beijing sought to exert greater control over the country’s powerful tech sector. The United States Securities and Exchange Commission said Friday that Chinese groups seeking to sell shares in America would be subject to more stringent disclosures.
Chinese stocks rebounded from their worst month in nearly three years, with China’s benchmark CSI 300 blue chip index listed in Shanghai and Shenzhen rising 2.6% on Monday, while Hong Kong’s Hang Seng index increased by 1%. The city’s Hang Seng Tech Index, which tracks major internet groups including Tencent and Alibaba, reversed initial losses to rise 0.9%. Futures that track Wall Street’s benchmark S&P 500 climbed 0.6%.
China’s cybersecurity regulator last month announced plans to review all foreign listings of companies with data on more than one million users after key Beijing executives called for an overhaul of the how the country regulates initial public offerings in the United States. The crackdown came just days after carpool group Didi Chuxing was listed for $ 4.4 billion.
Intensified scrutiny of how Chinese groups access capital markets weighed on equities, delivering the worst month for Chinese technology groups listed in the United States since the global financial crisis. The Hang Seng Tech Index fell 17% last month.
“While we do not consider it prudent to avoid investment in China altogether, further volatility can be expected until the first quarter of 2022, when we believe most regulatory changes may already be in place,” wrote Credit Suisse analysts in a note. Monday.
Meanwhile, data released by China over the weekend showed factory activity grew at the slowest pace in 15 months in July, with demand contracting for the first time in more than a year.
Government bonds remained stable with the yield of the benchmark German 10-year Bund moving in the opposite direction of its price, gaining 0.01 percentage point to minus 0.45. The US 10-year equivalent yield held steady at 1.244 percent.
Bond yields have fallen in recent weeks, despite higher-than-expected inflation figures in the United States and indications from the US Federal Reserve last week that it was approaching the day it would start cutting its $ 120 billion. dollars in monthly asset purchases.
The euro rose 0.1% against the dollar to $ 1.1882, while the pound gained 0.2% to buy $ 1.3924. World benchmark Brent crude prices fell 1% to $ 74.66.
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