China Stocks Lead Asia’s Gains; Evergrande’s Electric Car Unit’s Shares are Down More Than 8%

China stocks lead Asia's gains; Evergrande's electric car unit's shares are down more than 8%.--

Key Points

  • In Wednesday’s trading, Asia-Pacific stocks were mainly higher.
  • The Shanghai composite rose 1.96 percent to 3,266.60 on the day, while the Shenzhen component rose 3.1 percent to 12,263.80, leading to gains across the region’s major markets.
  • China Evergrande Group’s electric car unit’s Hong Kong-listed shares fell more than 8% when they resumed trading on Wednesday.

Asia-Pacific stocks were soaring in Wednesday trade as investors awaited developments in the Ukraine conflict.

The Shanghai composite rose 1.96 percent to 3,266.60 on the day, while the Shenzhen component rose 3.1 percent to 12,263.80, leading to gains across the region’s major markets.

After resuming trading on Wednesday, Hong Kong-listed shares of distressed developer Evergrande’s electric car unit fell 8.81 percent. Meanwhile, China Evergrande Group’s Hong Kong-listed shares will remain suspended until further notice, according to a statement released by the company on Tuesday.

In Hong Kong, shares of streaming companies Kuaishou and Bilibili fell 6.31 percent and 3.37 percent, respectively. According to a reputed Wall Street Journal report, China is preparing additional limits for its live-streaming sector.

As of the last hour of trading, Hong Kong’s broader Hang Seng index had risen 1.38 percent.

South Korea’s Kospi index rose 0.21 percent to 2,746.74 at the close. The S&P/ASX 200 index in Australia increased 0.67 percent to 7,514.50 at trading.

The Nikkei 225 index fell 0.8 percent to settle at 28,027.25, with shares of telecommunications major KDDI plunging more than 4%. To 1,967.60, the Topix index fell 1.21 percent.

Outside of Japan, MSCI’s broadest index of Asia-Pacific stocks rose 1.3 percent.

Investors observed U.S. Treasury yields on Wednesday, with markets now looking for a potential inversion between the 2-year and 10-year rates after the 5-year and 30-year rates inverted for the first time since 2006.

Yields move in the contrary direction to prices. The benchmark 10-year Treasury note yielded 2.3817 percent last week, while the 30-year Treasury bond yielded 2.4981 percent. The yield was 2.4716 percent on the 5-year treasury, while the yield on the 2-year Treasury note was 2.3345 percent.

An inversion of the yield curve had previously occurred before recessions, with the buying of longer-term Treasurys interpreted as an indication of investor anxiety about the economy’s health.

Nonetheless, Kelvin Tay of UBS Global Wealth Management believes the 10-year Treasury yield has been “distorted” by the Federal Reserve’s enormous balance sheet of roughly $9 trillion.

“If it weren’t for the Federal Reserve’s $9 trillion balance sheet… On Wednesday, Tay, the firm’s regional chief investment officer, told CNBC’s “Street Signs Asia” that 10-year Treasury yields “are mostly not going to be at 2.4 percent, but closer to the 3 percent range.”

Investors were sitting on the edge of their seats while observing developments in Russia-Ukraine. The Russian military began relocating some of its forces in Ukraine from Kyiv to other parts of the country, despite Pentagon Press Secretary John Kirby’s warning that the troop rotations do not imply a retreat.

Oil Rates Skyrocket

Oil prices rose 2.1 percent to $112.54 per barrel during Asia trading hours, with international benchmark Brent crude futures experiencing the same rise. Crude futures in the United States rose 2.33 percent to $106.67 a barrel.

After a recent slide above 98.8, the U.S. dollar index, which tracks the greenback against a basket of peers, was 97.983.


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