Asia report: Markets mixed as PBoC stands pat on interest rates

Markets closed in a mixed state in Asia on Monday, as China’s central bank stood pat on interest rates, sating market expectations.

In Japan, the Nikkei 225 was up 0.1% at 29,774.11, as the yen weakened 0.17% against the dollar to last trade at JPY 114.18.

Fashion firm Fast Retailing rose 0.47%, while among the benchmark’s other major components, automation specialist Fanuc slipped 0.02%, and technology conglomerate SoftBank Group was 0.5% lower.

The broader Topix index was down 0.08% by the end of trading in Tokyo, closing at 2,042.82.

On the mainland, the Shanghai Composite was 0.61% firmer at 3,582.08, and the smaller, technology-heavy Shenzhen Composite jumped 1.42% to 2,525.58.

The People’s Bank of China kept interest rates steady on Monday, as expected, with the one-year lone prime rate remaining at 3.85%, and the five-year rate staying at 4.65%.

“The PBoC is increasingly focused on the repo rate and liquidity management, with the loan prime rate almost irrelevant to the stresses roiling China’s property market,” said Pantheon Macroeconomics chief China economist Craig Botham.

“Having withdrawn CNY 290bn through repo operations last week, partially offset by a net medium-term lending facility injection of CNY 200bn, the PBoC has returned to adding liquidity this week, with a net addition through repo operations of CNY 40bn.”

South Korea’s Kospi was ahead 1.42% at 3,013.25, while the Hang Seng Index in Hong Kong was 0.39% weaker at 24,951.34.

Chinese internet companies JD.com and NetEase gained 1.93% and 3.02%, respectively, after it was confirmed on Friday that the two stocks would be included in the top-flight Hang Seng Index from 6 December.

The blue-chip technology stocks leapt higher in Seoul, with Samsung Electronics up 5.2%, and SK Hynix rising 7.17%.

In fresh data out of Korea- 20-day exports slowed to 27.6% year-on-year in November, from a previous 36.1%.

“Looking past the slowdown in the year-on-year numbers, there were glimpses of better news in today’s data release,” Pantheon’s Craig Botham added.

“The monthly change, seasonally adjusted, was the strongest gain in four months, at 5.3% month-on-month in November versus just 0.1% in October.

“This is an encouraging sign that recent headwinds might be easing, though we will need to wait for the trend to turn to be sure.”

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.15% at $79.01 per barrel, and West Texas Intermediate rising 0.2% to $76.09.

In Australia, the S&P/ASX 200 was down 0.59% at 7,353.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 1.04% weaker at 12,607.64.

The down under dollars were mixed against the greenback, with the Aussie last 0.3% stronger at AUD 1.3782, while the Kiwi weakened 0.07% to trade at JPY 1.4276.