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Asian Markets at Close Report

European Markets at Close Report

Jan 3, 2017

Asian Markets at Close Report on January 3, 2017: Asia Shares Rise After Strong China Manufacturing Data

marketwatch.com

Willa Plank


Asian markets closed broadly higher on Tuesday despite concerns about capital flight from China, and as the Indonesian government ended all partnerships with J.P. Morgan Chase & Co.
"There will be more concerns about the yuan," said Andrew Sullivan, managing director of sales trading at Haitong International Securities.

China set the yuan USDCNY, +0.2347%  0.2% weaker against the U.S. dollar Tuesday amid broad global gains for the greenback.
Tuesday's yuan fixing was the first to incorporate an expanded foreign-currencies basket, which now includes the Korean won and Saudi riyal.
Australia's S&P/ASX 200 XJO, +1.19%  closed up 1.2%, Korea's Kospi SEU, +0.88%  edged up 0.9% and Hong Kong's Hang Seng Index HSI, +0.68%  closed up 0.7%.
Japan's Nikkei Stock Average NIK, -0.16%  was closed for holiday.
Chinese stocks jumped during trading Tuesday, buoyed by signs of economic recovery, with the benchmark Shanghai Composite SHCOMP, +1.04%  finishing up 1%.
China's December Caixin manufacturing PMI came in at 51.9. This was up from 50.9 a month ago, and the strongest level since early 2013.
However, the Chinese market is dogged by persistent concerns of capital flight — concerns that are evident in rounds of regulatory tweaking.
The People's Bank of China recently tightened its supervision of money transfers by individuals in China as part of its anti-money-laundering efforts. The central bank also lowered the threshold on the size of transactions that banks need to disclose to the PBOC — a move that analysts said should help reduce outflows.
Speculation was also percolating over the weekend that Beijing would sharply limit Chinese citizens' ability to use their US$50,000 annual quota to convert yuan into foreign currencies, if they intended to use the money to invest offshore or buy overseas property. China's foreign-currency regulator clarified that this was always the case, but that it would pay more attention to enforcement of the rule.
The rules do not stop investing by Chinese in Hong Kong stocks through the Connect scheme.
The Shanghai Stock Exchange on Tuesday halted trading of China's 50-year government bonds due to "abnormal fluctuations," shortly after its price tumbled more than 10%.
The bond's price tumble was unusual but analysts refrained in reading too much into it, as the ultralong bond is illiquid. The last time this bond traded was in mid-December, according to Pin Ru Tan, director of Asia-Pacific rates strategy at HSBC in Singapore.
"Is the news surprising? Yes, to a certain extent. But it's consistent with what we've seen with the selloff in the interbank market," said Ms. Tan, adding that there was "nothing particularly alarming" about this latest development.
Indonesia's government on Tuesday cut its business partnerships with J.P. Morgan Chase & Co. JPM, +0.47%  , pointing to a recent country downgrade by the U.S. bank.
Indonesia's Finance Ministry said in a letter that, effective Jan. 1, it was ending all partnerships with J.P. Morgan due to research that could "potentially create disturbances in national financial system stability."
Indonesia's stock market dropped 0.4%.
Macau casino shares saw selling Tuesday. Sands China 1928, -0.30%  was down 0.3% and Galaxy Entertainment 0027, -1.33%  was off 1.3%. Fresh data showed gambling revenue in the enclave fell 3.3% to 223.2 billion patacas ($27.9 billion) last year, though revenues rose about 8% year-on-year in December.