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China Blue Chip Index Hits 5-year High; Australian Shares Tumble as Borders Close

James Hyerczyk

The major Asia-Pacific stock indexes finished mostly higher on Monday with some scaling four-month peaks as investors bet heavily on a revival in Chinese activity to sustain global growth. MSCI’s broadcast index of Asia-Pacific shares outside Japan climbed 1.5% to its highest since February.

Even more impressive was a jump in Chinese blue chips which surged nearly 6.0%, on top of a 7% gain last week, to their loftiest level in five years.

On Monday, Japan’s Nikkei 225 Index settled at 22714.44, up 407.96 or +1.83%. Hong Kong’s Hang Seng Index finished at 26339.16, up 966.04 or +3.81% and South Korea’s KOSPI Index closed at 2187.93, up 35.52, up 1.65%.

In China, the Shanghai Index settled at 3332.88, up 180.07 or +5.71% and Australia’s S&P/ASX 200 Index finished at 6014.60, down 43.30 or -0.71%.

China’s Blue Chip Vault to 5-year High on Hopes of Economic Recovery, Policy Support

China stocks closed higher for a fifth straight session on Monday, extending a robust rally, led by financial shares on hopes of a quick economic recovery, Beijing’s continued reforms in the capital markets and ample liquidity, Reuters reported.

The blue-chip CSI300 index closed up 5.7% at 4,670.09 points, its highest value since June 25, 2015, while the Shanghai Composite Index climbed to its highest since March 2018. The CSI300 also posted its biggest one-day gain since February 25, 2019, while SSEC logged its best session since July 9, 2015.

“China has become a safe haven for investors now, as the recent coronavirus outbreak in Beijing helps investors realize the impact from a second wave of outbreak, if any, in the country would be very limited,” said Zhang Chengyu, vice general of Beijing-based Shiji Hongfan Asset Management Company.

“The rally now is just the beginning of a strong rising trend, and more money would pour into the A-share market,” Zhang added.

Hong Kong Stocks Track Mainland Gains, End at Over 4-Month High

Hong Kong shares closed at a more than four-month high on Monday, tracking equities in the mainland.

The Hang Seng Index rose 3.81%, while the China Enterprises Index gained 4.7%. The sub-index of the Hang Seng tracking energy shares rose 3.9%, while the IT sector rose 1.05%; the financial sector ended 4.85% higher and the property sector rose 4.21%.

Border Closures Hurt Share Market

The Australian stock market closed lower on Monday as state border closures with Victoria sparked fear of a second wave that could damage the country’s economic rebound.

Monday’s slight market slump comes off the back of a Deloitte Access Economics report, which flagged economic growth would contract by 3 percent in 2020 as a result of the COVID-19 shutdown.

Major bank shares made little movement throughout the day. The energy and material sectors also suffered declines. Additionally, refreshed lockdowns on travel also impacted the share price performance of Qantas.

For a look at all of today’s economic events, check out our  economic calendar.

This article was originally posted on FX Empire

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