SINGAPORE — Stocks in Asia-Pacific mostly advanced in Monday morning trade, as investors monitor the Chinese yuan’s movements.
Mainland Chinese stocks were among the biggest gainers regionally, with the Shanghai composite up 1.13% while the Shenzhen component jumped 1.356%. Hong Kong’s Hang Seng index also surged 1.56% while shares of Chinese tech juggernaut Tencent soared more than 2%.
South Korea’s Kospi rose 0.62% as shares returned to trade following a Friday holiday.
Meanwhile, shares in Australia were higher, with the S&P/ASX 200 up 0.24%. In Japan, the Nikkei 225 bucked the trend and slipped 0.16% while the Topix index shed 0.13%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.75% higher.
Chinese yuan watch
Investors will monitor the yuan’s movements on Monday, after the People’s Bank of China announced a rule change that made it cheaper to short the yuan.
Traders short the yuan when they expect the currency to weaken in future. One way to do so is to borrow in yuan in hopes of buying it back at a lower price later and pocketing the difference.
The central bank announced Saturday that financial institutions now no longer need to set aside cash when conducting some foreign exchange forwards trading, with effect from Monday. Previously, financial institutions had to set aside 20% of the previous month’s yuan forwards settlement amount as foreign exchange risk reserves, according to Reuters.
In Monday morning trade, the onshore yuan changed hands at 6.7224 per dollar, as compared to levels below 6.7 against the greenback seen last week. Meanwhile, its offshore counterpart last traded at 6.7188 per dollar.
National Australia Bank’s Tapas Strickland said the moves in the yuan were likely driven by the rule change “which makes it less expensive to short the (Chinese yuan) and signals less (concern) about currency weakness.”
Oil prices slip
Oil prices were lower in the morning of Asian trading hours, with international benchmark Brent crude futures down 0.86% to $42.48 per barrel. U.S. crude futures also shed 0.79% to $40.28 per barrel.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.096 following a recent slide from levels above 93.3.
The Japanese yen traded at 105.57 per dollar after strengthening from levels above 105.9 against the greenback last week. The Australian dollar changed hands at $0.7225 after rising from about $0.71 last week.
Source: CNBC