Asian stocks mixed; small-caps lead gains in China

Asian stocks put up a mixed performance on Thursday, as investors kept a wary eye on China which recovered from the prior day’s sudden sell-off.

Small-caps in the mainland, in particular, attracted strong buying interest.

However, weakness in commodity prices, an uninspiring lead from Wall Street and caution ahead of the European Central Bank’s policy meeting later in the day kept a lid on risk appetite.

“Global investors are taking a wait-and-see stance before the ECB event, as depending on the outcome the euro could move sharply,” Hikaru Sato, a senior technical analyst at Daiwa Securities, told Reuters.

Major U.S. averages finished lower overnight, pulled down by insurers and healthcare plays as well as a mixed bag of corporate earnings. The tech-heavy Nasdaq Composite dropped 0.8 percent, while the Dow Jones Industrial Average and S&P 500 closed down 0.3 and 0.6 percent respectively.

In the energy space, global oil prices slid more than 2 percent to three-week lows on Wednesday, chalking up a three-session losing streak, on worries over rising U.S. crude stockpiles.

Meanwhile, copper fell to near two-week lows in the previous trading session, hurt by oversupply woes and slowing demand growth from China.

China’s key Shanghai Composite index swung up in late-day trading to close up 1.5 percent, a day after skidding 3.5 percent to a near one-week low on Wednesday.

The CSI300 Index also shrugged off a weaker start, rising 1.5 percent.

 

On the other hand, investors rushed into small caps following Wednesday’s sharp downturn in late-day trading. The Shenzhen Composite more than doubled gains to 3.7 percent while the start-up ChiNext board moved up 4.5 percent.

“It’s uncertain what caused the selloff in Chinese markets yesterday. Was it rumors that the government was going to pull market support? Concerns about Sinosteel missing its interest payment? Or did we just see some profit taking after a 20 percent rise in the Shanghai Composite? I would lean towards a combination of the latter two,” IG’s market strategist Angus Nicholson wrote in a note.

Hong Kong markets reopen for trade after being shut for the Chung Yeung Festival in the previous trading session. The benchmark Hang Seng index halved losses to 0.7 percent as of 3pm local time.

Shares of Air China and China Southern Airline were among the day’s top gainers, up more than 6 percent each in Shanghai, following a report by the Shanghai Securities News that both carriers are considering a merger. The Hong Kong-listed stocks of both airlines soared 4.3 and 1 percent respectively.

Meanwhile, shares of Hong Kong-listed Real Nutriceutical Group tanked 5.5 percent after U.S.-based Glaucus Research Group California released a report on Thursday which said the company’s “sales and net income are substantially less than reported to investors and regulators in the Company’s Hong Kong filings.”

Glaucus has a strong sell rating on the stock.

Source: CNBC