Trade tensions and a slowing of the Chinese economy have had a huge impact on Asian markets stock this year. Japan, a market that is traditionally resilient thanks to strong domestic performance, has even felt the losses from a deteriorating Chinese/U.S. relationship.
International investors who engage in Asian markets will have something to smile about this week, as China stocks have had the biggest single day rally in two years. Markets across the region displayed positive results for the most part.
Indexes in China Up for the Start of the Week
Sellers were highly active on Monday morning, but the Chinese stock markets helped offset this with strong single-digit growth in the afternoon.
The Shanghai Composite (SHCOMP) index was up 4.5% on Monday morning, and was still tracking strongly with 4.09% growth at the end of the day. The composite Shenzhen index (CN:399106) performed even better, rallying 4.9% on Monday. Hong Kong (HK:0388), which has generally been more stable throughout 2018, also had strong growth with a 3.35% rise by the end of the day.
Stocks up but China Still Not out of Its Slide
International investors will be excited by the Chinese stock market today, but it’s not quite time to start celebrating. Last week was particularly dismal for Americans who hold stock through overseas brokerages. The Shanghai Composite lost 7.6% over the previous five days of trading, so today’s gains only go part of the way towards recovering the losses.
China’s GDP performance is weaker than expected for the third quarter, and the government will begin to implement financial programs including stimulus packages to help steer the economy back towards growth.
Asian Markets Performance in Other Key Economies
The Nikkei (NIK) index in Japan started the day tracking at -1% but ended with moderate growth of 0.37%. The KOSPI (KR:SEU) index in South Korea closed up 0.25%. The Taiwanese TAIEX (XX:Y9999) index closed with 0.55% growth.
Australia’s ASX 20 benchmark index closed the day down -0.58%. Australia relies heavily on China and other nearby nations for export earnings, and a weakened Asian economy can have a direct impact on its domestic market.
Caution is Best for October
Just like the American stock market, caution would be ideal for investors who have holdings in Asian markets. October is likely to continue to be volatile globally, as has been shown in the last three weeks of trading. The last quarter of the year could come with a reprieve and even some strong growth, but close monitoring over the next two weeks will be needed to identify any emerging trends.
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