HK stocks rise despite US election, Japan worries

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HONG KONG: Hong Kong stocks soared Tuesday after a five-day sell-off with data indicating forecast-beating growth in Chinese factory activity providing a boost but uncertainty over the US presidential race keeping investors on edge.

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The closely watched purchasing managers index hit its highest level in more than two years, Beijing said, indicating the important manufacturing sector—and the world’s number two economy—is leveling out.

A separate, private index also beat expectations to hit its highest mark since July 2014.

The figures come weeks after official data showed economic growth stabilising and putting the government on target to achieve its annual target, while another reading showed a first increase in factory gate prices for four years.

“This might be as good as it gets,” Frederic Neumann, co-head of Asian economic research at HSBC in Hong Kong, told Bloomberg News. “A generous stimulus injected earlier this year is still winding itself through the economy.”

But he cautioned that “with the government tapping the brakes of late in the property sector, growth will likely cool again in the coming months.”

Hong Kong stocks rallied 1.3 percent, having retreated almost three percent in a five-day sell-off. Shanghai was up 0.3 percent and Singapore put on 0.6 percent.

But Tokyo ended the morning down 0.2 percent while Sydney shed 0.6 percent and Seoul 0.2 percent.

US election fears drag

Confidence is still fragile after Friday’s bombshell news that with just under two weeks to the election, the FBI was investigating additional emails connected to Democratic nominee Hillary Clinton, Wall Street’s preferred candidate.

“There is a lot of uncertainty,” Tony Farnham, a Sydney-based strategist at Patersons Securities, said. “There’s plenty happening over the next week and there’s a degree of caution around the key events.”

However, the Mexican peso strengthened against the dollar, having tumbled Friday on the FBI news as Clinton’s rival Donald Trump has promised to tear up a trade deal between the two countries and build a wall on their border.

In Asian trade the dollar bought 18.81 pesos, compared with 18.96 pesos the day before.

The dollar barely moved against the yen after the Bank of Japan pushed back its inflation timeline by one year.

The pound dipped back against the dollar, having enjoyed a rare bump after Bank of England governor Mark Carney said he would extend his tenure by another year, putting an end to speculation over his future.

Sterling ended Monday at $1.2242, one cent up from earlier in the day. On Tuesday in Asia it fetched $1.2236.
Investors were also keeping an eye on a string of possible market-moving events this week, including gatherings of the Federal Reserve and Bank of England.

The end of the week will also see US jobs figures, which will provide a better idea about the Fed’s plans for interest rates.

Oil prices made meek gains, having been hammered again Monday on worries about the chances of the success of OPEC’s agreement in September to cut output, following the failure last week to agree details.

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