Asia report: Most markets rise as China makes shorting yuan cheaper

Markets in Asia closed mostly higher on Monday, led by stocks in China, as investors kept watch on renminbi after the country’s central bank changed some currency rules.

In Japan, the Nikkei 225 was down 0.26% at 23,558.69, as the yen strengthened 0.09% against the dollar to last trade at JPY 105.53.

Technology conglomerate SoftBank Group was up 2.64%, while among the benchmark’s other major components, automation specialist Fanuc was down 1.79% and fashion firm Fast Retailing was 0.1% weaker.

The broader Topix index was off 0.24% by the end of trading in Tokyo, closing its session at 1,643.35.

On the mainland, the Shanghai Composite was up 2.64% at 3,358.46, and the smaller, technology-heavy Shenzhen Composite was 3.31% firmer at 2,289.36.

The gains for Chinese stocks came after authorities took the wraps off “a new comprehensive reform plan” for the industrial centre of Shenzhen, according to state news agency Xinhua.

According to the reports, the reforms would give local authorities a “more direct and greater say in business”, including in implementing market-based economic reforms on a local basis.

The country’s currency was also in focus, after the People’s Bank of China announced rule changes that would effectively make it cheaper for traders to short the yuan.

It announced on Saturday that the requirement for financial institutions to set aside money when conducting some types of foreign exchange trading, having previously required them to retain 20% of the prior month’s forwards settlements in reserve.

South Korea’s Kospi was ahead 0.49% at 2,403.73, while the Hang Seng Index in Hong Kong was 2.2% higher at 24,649.68.

Chinese banks rocketed to the top of the board in the special administrative region, with China Construction Bank up 5.58%, Bank of China ahead 4.18%, and ICBC 5.74% firmer.

Both of the blue-chip technology stocks were stronger in Seoul, with Samsung Electronics up 1.17% and chipmaker SK Hynix adding 3.14%.

“Asia markets have got off to a mixed start to the week with Chinese stocks pushing higher after the People’s Bank of China changed its rules which made it cheaper to short its currency, after the yuan hit a six-month high at the end of last week,” said CMC Markets chief market analyst Michael Hewson.

“Stock markets have been surprisingly resilient over the last week or so, despite the increasingly diminishing short term prospect of a US stimulus deal, against a backdrop of rising infection rates across Europe, and the rising likelihood of further restrictions.

“One reason behind recent stock market resilience could be a growing belief that whoever wins next month, with the polls increasingly leaning towards Biden, there will be a sizable fiscal stimulus coming whoever wins, with the only unknown being around the size of any possible package.”

Oil prices were lower at the end of the Asian day, with Brent crude last down 1.24% at $42.32 per barrel, and West Texas Intermediate losing 1.43% to $40.02.

In Australia, the S&P/ASX 200 advanced 0.49% to 6,132.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 0.62% to settle at 12,356.89.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.5% at AUD 1.3877, and the Kiwi retreating 0.15% to NZD 1.5044.