Asia report: Stocks mixed as PBoC keeps rates on hold

Asia-Pacific markets finished with a mixed performance on Monday, following a recent downturn in most major bourses.

The People’s Bank of China opted to keep its benchmark lending rates unchanged, with the one-year loan prime rate at 3.45% and the five-year benchmark loan rate at 4.2%.

“Most Asia-Pacific stocks were positive, but gains were limited due to a lack of fresh catalysts over the weekend,” said TickMill market analyst Patrick Munnelly.

“Investors are waiting for key risk events this week, including the release of FOMC minutes on Tuesday.”

Munnelly noted that the Nikkei 225 swung between gains and losses, reaching its highest level since 1990 before wiping out all of its gains.

“The Hang Seng and Shanghai Composite outperformed due to resilience in tech and support pledges for the property sector.”

Markets mixed after sliding late last week

In Japan, the Nikkei 225 declined by 0.59%, closing at 33,388.03, while the Topix index was down by 0.77% at 2,372.60.

The losses on Tokyo’s benchmark were led by Mazda Motor, down 6.07%; Odakyu Electric Railway, off 4.21%; and Suzuki Motor, which lost 3.94%.

China’s markets fared better, with the Shanghai Composite rising by 0.46% to 3,068.32 and the Shenzhen Component up by 0.43% to 10,022.70.

Beijing Electronic Zone Investment and Development Group jumped 10.09%, and Beijing Worldia Diamond Tools leapt 10.07% in Shanghai.

Hong Kong’s Hang Seng Index outperformed, adding 1.86% to reach 17,778.07.

Citic Pacific, JD Health International, and Haidilao International led the gains in the special administrative region, which were up 6.54%%, 5.42% and 5.33%, respectively.

South Korea’s Kospi index also registered gains, rising by 0.86% to 2,491.20, as Hanwha Ocean and Krafton made gains of 12.04% and 5.13%, respectively.

In Australia, the S&P/ASX 200 increased by 0.13% to 7,058.40, with Coronado Global Resources adding 3.86% and Allkem rising 3.22% by the close in Sydney.

Meanwhile, New Zealand’s S&P/NZX 50 saw a modest increase of 0.27% to reach 11,207.46, with Tourism Holdings growing 3.82% and A2 Milk Company ahead 3.72%.

In currency markets, the dollar was last down 0.83% on the yen to trade at JPY 148.39.

Meanwhile, the greenback was off 0.62% against the Aussie at AUD 1.5254, while it retreated 0.76% on the Kiwi to change hands at NZD 1.6566.

On the oil front, both Brent crude and West Texas Intermediate futures were last up 0.41%, with the former last at $80.94 per barrel on ICE and the NYMEX quote for West Texas Intermediate at $76.20.

China maintains loan prime rates, Thai economic growth slows

In economic news, China’s central bank kept its one-year and five-year loan prime rates at 3.45% and 4.2% for November.

It marked the third consecutive month that the People’s Bank of China kept the one-year LPR steady, following its reduction from 3.55% to 3.45% in August.

The five-year LPR had also remained unchanged for five consecutive months, with its last adjustment occurring in June when it was lowered from 4.3%.

“Monetary policy is playing an accommodative role, supporting fiscal policy,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“The PBoC made a net injection of CNY 600bn in medium-term lending facility (MLF) funding last week to ensure the banking system has sufficient liquidity to absorb government bond issuance.”

Wrigley said the Ministry of Finance should issue CNY 1trn in special bonds for post-disaster reconstruction and similar infrastructure projects by the end of the year, which it would transfer to local governments in the fourth and first quarters for spending.

“We expect the PBoC to hold policy rates steady in December, while injecting liquidity - a reserve ratio requirement cut is quite likely, on top of additional MLF funding - to facilitate government bond issuance.”

In Thailand, the country’s gross domestic product (GDP) grew by 1.5% year-on-year during the third quarter, representing a slowdown from the 1.8% expansion in the second quarter of 2023.

The GDP growth figure fell short of the 2.4% forecast by economists polled by Reuters.

Thailand’s National Economic and Social Development Council put the deceleration down to a decrease in exports in the third quarter but highlighted that service receipts continued to expand, driven mainly by the increasing number of foreign tourists.

Reporting by Josh White for Sharecast.com.