Asia: Japan nears breakout, China property boost, India al Qaeda concern
Asian markets displayed mixed results, with the Nikkei and Sensex seeing some profit taking after good runs, while the Hang Seng was almost flat and the Shanghai composite and Kospi posted small gains.
Tokyo was reacting to the Bank of Japan concluding its two-day meeting and holding steady on its monetary policy at the current rate of 60-70trn yen per year.
A statement from the central bank said "Japan's economy is expected to continue its moderate recovery trend, and the effects of the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike are expected to wane gradually".
This came after more encouraging wage growth data and a cabinet reshuffle focused on growth this week and, in a note on Thursday morning, Mick Gilligan, head of research at broker Killik, alerted clients to a possible Japanese chart breakout.
Acknowledging that it would take some time for any meaningful turnaround in the Japanese economy after 20 years in the doldrums, he cited the long-term scope for consistently higher inflation to generate a sea change in consumption and investing habits was something the equity market was likely to anticipate "well in advance".
"We would encourage investors to ensure that they have exposure to this market," he said, adding that the Japanese Topix index was at a key technical level and any convincing break above the 1,300 level on the would represent "a very bullish signal".
In China, property developers lifted the market after the government said it would allow them access to the interbank bond market for bond issuances in order to relieve funding pressures.
Deutsche Bank also cited reports that Beijing may reduce its stake in the state banks further as it encourages more private-public ownership structures.
Furthermore, Fitch said that revisions to China's budget law at the end of August "represent a significant reform, providing a framework for significantly greater transparency and accountability for local government debt management".
The rating agency said it expected these changes will eventually improve the quality of budget management and the debt sustainability of local authorities, as well as helping central government to align regions more directly with public service provision.
"Fitch believes the measure is a step forward in a long-expected process to manage China's government debt issues through the migration of liabilities on to the sovereign balance sheet."
India concern about al Qaeda and gold smuggling
The Indian government has ordered several provinces on Thursday to be on increased alert after terrorist group al Qaeda announced the formation of a wing of the militant group in India, according to the New Indian Express.
Until now there has been no evidence that al Qaeda has a presence in India.
A more economic concern was that gold smuggling into the country is on the rise, according to a report in the Financial Times.
Although new Prime Minister Narendra Modi has maintained India's policy of restricting gold imports to improve their current account deficit, the World Gold Council estimates that 200 tonnes of gold will be smuggled into India this calendar year.
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