ASIAN EQUITY AND BOND TRADED FLAT
The Nikkei 225 Index edged lower by 0.4% to close at 29,688 while the broader Topix Index lost 0.61% to 2,038 on Wednesday, as a weaker yen and slower-than-expected export growth weighed on investor sentiment, while technology heavyweights tracked Wall Street peers higher. Japan’s export growth snapped seven months of double digit expansion in October due to slowing car shipments to US and China, reflecting the export-reliant country’s vulnerability to supply chain disruptions. The yen also weakened to a new multi-year low, which may benefit Japanese exports but also a negative factor for companies amid rising raw materials costs. Some of the market decliners include Recruit Holdings (-4.61%), Mitsubishi UFJ (-1.51%) and Fast Retailing (-1.25%), while market gainers were Lasertec (5.31%), Tokyo Electron (3.31%) and Advantest (3.23%).
Meanwhile, The yield on the benchmark Japan 10-year JGB rebounded to 0.08% in mid-November, a level not seen since the beginning of the month, tracking US Treasury notes lower as the case strengthen for further monetary policy tightening by the US amid stronger-than-expected US retail sales. Meanwhile, the tertiary industry index in Japan increased 0.5% in September, following a 1.7% drop in the previous month, which indicates an improvement in service activities such as wholesale and retail trade, healthcare, entertainment, and transportation services.
The BSE Sensex closed 314.04 points or 0.52 % lower at 60,008.33 on Wednesday, losing for the second consecutive session, dragged down by banks and some of the capital goods. Investor sentiment weakened as Fitch maintained a negative outlook on India’s sovereign rating owing to the country’s highest public debt among its peers for the year ending 21. 20 out of 30 stocks on BSE Sensex ended in red. Among the individual stocks, Axis bank dragged the most (-1.95%), followed by Reliance (-1.91%) amid heavy selling pressure, Kotak Bank (-1.51%) and Bharti Airtel (-1.39%). On the other hand, autostock Maruti (up by +2.77%) remained the best performer on optimism that production would ramp up amid reports of Malaysia increasing the output of semiconductor chips in October next year, whereas Asian Paint (up by +2.47%), Power Grid (+2.08%) and National Thermal Power Corporation (1.68%) were the other gainers.
Meanwhile, The yield on the 10-year government bonds in India stood above 6.3% in November, slightly below levels not seen since February of 2020, and tracking the US treasury yield, amid persistent inflationary pressure from surging crude oil prices and supply constraints. Meanwhile, the country’s central bank announced opening of the USD 1.1 trillion sovereign bond market to retail investors through Prime Minister’s “RBI Retail Direct Scheme” while it suspended bond buying under its “Government Securities Acquisition Programme” last month.
The Shanghai Composite Index rose 0.44% to close at 3,537 while the Shenzhen Component Index gained 0.67% to 14,711 on Wednesday, snapping two losing days and defying declines in other Asian markets, helped by gains in clean energy-related and high-end manufacturing stocks. Global asset manager T. Rowe Price also pointed to upside potential in Chinese companies as the “regulatory cycle” or government crackdown on certain sectors is expected to fade in the next two to three quarters. Gains in the market were led by Tianqi Lithium (10%), Jiangsu Akcome (10%), Ganfeng Lithium (6.62%), China Northern Rare Earth (5.19%) and Jiangsu Zhongtian (6.61%), among others.
Meanwhile, The yield on the benchmark China 10-year government bond traded below 2.95%, not far from a one-month low of 2.905% hit on November 5th, following a record liquidity injection by the People’s Bank of China (PBOC) and as concerns about Sino-American relations eased. The central bank injected 1 trillion yuan in the economy through the medium-term lending facility on November 14th. Meanwhile, Joe Biden and Xi Jinping met in a 3 and a half hours online summit to discuss Taiwan, where the US President underscored his administration’s commitment to the “One China” Policy, and also to talk about trade and a potential joint oil release. Sentiment also improved after embattled property developer Evergrande made a last second interest payment on its dollar-denominated bonds.
