HONG KONG: Asian stocks held ground on Tuesday though Chinese equities surged to a fresh two-month high as domestic funds piled into financial counters on expectations the world’s second biggest economy may have turned a corner. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.2 percent on Tuesday and held below a 19-month peak hit last Thursday. The index is up more than 11 percent since Dec. 23, which marked the trough in a selloff triggered by Donald Trump’s surprise win at the U.S. election in November. With U.S. markets closed for the Presidents Holiday on Monday, Asian markets have had few global cues off which to trade.
Chinese stocks led regional gainers with mainland indexes extending a nearly 7 percent rise over the last month thanks to an influx of fresh funds from domestic institutional investors and a brightening outlook for the domestic economy. “We upgraded our China equities call last month because of the strong economic data and comments coming out from the new U.S. administration pointing to a softer stance towards China,” said Francis Cheung, head of China-Hong Kong strategy at CLSA.
China’s blue-chip index .CSI300 clocked its best day in six months on Monday on reports pension funds will begin pumping in funds into the country’s stock markets. Meanwhile, turnover in Hong Kong shares has jumped noticeably in recent weeks. Despite the bounce in mainland stocks, valuations remained broadly middle of the pack in Asia with price-to-earnings multiples for Chinese stocks at 19.7, far below Australia’s and India’s at 25 and 23 times, respectively.
