Asian stocks mixed amid Evergrande anxiety and Chinese energy crunch

Leading investment firms continue to revise Chinese growth forecasts

Guiyang, China skyline at Jiaxiu Pavilion on the Nanming River                                 
Chinese markets are seeing increased liquidity from the People’s Bank of China – Photo: Shutterstock
                                

Asian stocks experienced a mixed session on Tuesday as central bank intervention continued to bolster Chinese markets amid the ongoing uncertainty surrounding China’s second-largest property developers, Evergrande Group. 

The world’s most indebted real estate developer closed up by 4.7% at the end of Hong Kong trading, while the Hang Seng and Shanghai composite indices traded 1.2% and 0.5% higher.

PBoC continues to intervene

The People’s Bank of China (PBoC) continued to add liquidity into the market, injecting CNY100bn ($15.5bn, £11.4bn, €13.25bn) via a 14-day reverse repurchase agreement on Monday and again on Tuesday. 

Both Hong Kong and mainland China’s leading property indices rose after the central bank vowed to “maintain the healthy development of the real estate market” and to “safeguard the legitimate rights and interests of the housing consumers”.

Investors nonetheless remain on tenterhooks as to Evergrande’s fate. The company recently failed to settle an interest payment to offshore bond holders and now has less than a month to make good on its commitment lest it default. 

Energy crunch

Elsewhere, the widening energy-supply crisis has further dampened confidence in China’s post-Covid recovery to such an extent that leading investment firms have revised their growth forecasts. 

On Monday, Goldman Sachs said that the Chinese economy would grow by 7.8% in 2021 instead of the 8.2% it had previously envisioned. It cited ongoing production cuts caused by power outages as “significant downside pressures”.

Other Asian indices

South Korea’s KOSPI Index closed the day down by 1.1% at 3,097.92 – its lowest finish in almost five weeks. 

Japan’s Nikkei 225 pared its losses to trade 0.19% lower. The index had enjoyed a healthy run in the past month, rising by more than 10% after Prime Minister Yoshihide Suga announced he would not seek re-election. Fears of an Evergrande contagion have since arrested this momentum, however. 

Having fallen by as much as 1.7%, the Bombay Sensex closed Tuesday down by 0.6% at 59,667.60, having recently risen to an all-time high of 60,333.00.

Further reading: Crypto market shrugs off latest China crackdown

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