Asia: Chinese stocks enter bull territory but fail to spark wider region

Asian equity markets endured a mixed day on Thursday, as Chinese shares closed in on bull-market territory but failed to lift stocks across the region.

The Shanghai Composite Index rose 1.83%, meaning it has now extended its gains from the bottom of the summer selloff by 20.3%, while the Shenzhen Composite Index gained 0.20% and has surged 32% since its recent low on 15 September.

Chinese equities plunged 43% between June and August but have since staged an impressive rebound, boosted by the prospect of further stimulus measures and, more recently, by news that Beijing will implement a new trading link to further open its market to foreign investors.

Hong Kong’s Hang Seng Index was broadly flat and finished the day 0.01% lower.

Japan’s Nikkei Stock Average climbed 1%, extending gains from the previous session when the initial public offering of Japan Post Holdings drove stocks higher. The state-owned postal operator was up 3.4% on Thursday, while its financial units Japan Post Insurance and Japan Post Bank jumped 13.4% and 6.2% respectively.

Elsewhere, Australia’s S&P/ASX 200 and South Korea’s Kospi fell 0.94% and 0.16% respectively, with the former hit by ongoing weakness in commodity prices.

On the currencies front, the Japanese yen slid 0.28% against the dollar, while the Australian dollar declined 0.21% against its American counterpart after the US dollar strengthened in the wake of Janet Yellen’s comments on Wednesday.

The Federal Reserve chairwoman said an interest rate hike in December was very much a “live possibility”, adding that “at this point, I see the US economy as performing well.”

However, while Yellen hinted again at the possibility of rate hike before the end of the year, analysts insisted the Fed’s decision could still be influenced by the economic data released over the next month.

“Once again we have been left with a hawkish FOMC with a dove as its chair,” said Brenda Kelly, head analyst at London Capital Group.

“The markets are pricing in a 58% probability of a rate hike nevertheless but macro data and the outlook for inflation will still be closely watched.”