Promise of reform makes Chinese stocks soar
AP and AFP
May 13, 2014, 12:13 am TWN
BEIJING/HONG KONG--Stocks in China and Hong Kong soared Monday on promises of financial reform but markets elsewhere were subdued after a record close for the Dow Jones Industrial Average.
China's Shanghai Composite jumped 2.1 percent to 2,052.87 after the Cabinet promised in an announcement late Friday to allow local governments to issue bonds and to streamline the approval process for initial public stock offerings. It gave no details, but the news also boosted Hong Kong's market with the Hang Seng up 1.8 percent to 22,261.61.
China's State Council, or cabinet, late Friday issued guidelines to promote development of the stock, bond and futures markets, including expanding the scale of foreign investment in the capital markets.
“The guidelines boosted investor confidence,” Haitong Securities analyst Zhang Qi told AFP. But he said gains could be capped by worries over upcoming initial public offerings.
Other markets were more subdued despite a rebound in U.S. tech stocks that pushed the Dow to a record close on Friday. Tensions between the West and Russia over the future of Ukraine continue to provide a negative backdrop for investment sentiment.
Pro-Russian insurgents who organize autonomy referendums in two regions of eastern Ukraine say about 90 percent of voters have backed their calls for sovereignty. The Ukrainian and Western governments have condemned the balloting as a sham and a violation of international law.
“The state of affairs in Ukraine is appalling,” said Mizuho Bank in a report. “The fears are that separatists in Ukraine involving Russian complicity could ratchet up instability in Eastern Europe.”
In Europe, France's CAC-40 was down 0.2 percent to 4,469.83 while Germany's DAX added 0.3 percent to 9,607.67. Britain's FTSE 100 rose 0.3 percent to 6,833.15.
Futures augured modest gains on Wall Street. Dow futures rose 0.1 percent to 16,550 and S&P 500 futures climbed 0.2 percent to 1,876.70.
In other Asian markets, Tokyo's benchmark Nikkei index lost 0.35 percent, or 50.07 points, to close at 14,149.52 as investors awaited the release of key Japanese and U.S. data later in the week, including U.S. retail sales and housing starts.
“This will be a week when investors will assess the U.S. economic outlook after the impact of the polar vortex (cold weather) has rounded off,” SMBC Nikko Securities said in a note to clients.