Asian Market Snapshot: Most Stocks Rise on Cheap Valuation, Weaker Yen and Speculation Fed Will Act

In a choppy trading day Asian markets opened higher and traded lower in the first hours before paring back losses to close higher for the day.  Cheap valuation sparked the gains as investors speculated that prices have fallen excessively relative to earnings.

The MSCI Asia Pacific Index fell 1.4% to116 while the MSCI ASIA APEX 50 lost 0.8% to 733.

In Japan, stocks rose on a weaker yen and speculation that stocks were undervalued. The Nikkei 225 rose 0.7% to 8,906 led by exporters as the yen weakens. Yahoo Japan climbed 5.7% while Suzuki Motor rose 2.9%.

In Hong Kong, stocks fell as China Life dropped 6.3% on weak earnings prospects. The Hang Seng Composite fell 0.1% to 20,612. Hong Kong’s trade balance rose in the nine months to July to a deficit of 30.5 billion versus 30.6 billion in the prior period.

In mainland China, stocks rose after Premier Wen called for accelerated consolidation in the coal industry. The Shanghai SE Composite gained 0.2% to 2,603. Zhengzhou Coal climbed 9.96% while Shang ACE gained 2.03%.

In India, stocks rose as raw materials shares gained on speculation that increased demand will boost prices.The BSE SENSEX 30 gained 0.3% to 18,226. Tata gained 0.5% while Jindal Steel gained 1.35%.  

In Australia, the S&P/ASX 200 index rose 0.8% to 4,356 while in Korea the KRX 100 lost 0.2% to 3,634.  Woolworths gained 2.4% after forecasting increased earnings.

On currencies, the yen weakened 0.05% to 84.57 asthe flight to safe haven abates while other major Asian currencies rose.The Aussie dollar rose 0.5% to 1.126 while the New Zealand kiwi gained 0.52% to 1.421. 

10-year JGBs fell with the yield up 3.7 bps to 0.945%. Sovereign cash yields rose except in China, India and Malaysia as investors re-risk their assets. Sovereign CDS spreads widened in the region. Corporate spreads narrowed in Japan with the iTraxx Japan index down 2.9 bps to 112 bps. Elsewhere in the region, corporate spreads widened with the Markit iTraxx Asia ex-Japan 50 IG up 5.8 bps to 134 bps.

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