Persisting Slump Potentially Expands for Hong Kong Stock Market
In the global financial landscape of July 5, 2021, Asian markets displayed a mix of optimism and caution, buoyed by progress in trade negotiations and a nuanced picture of economic data.
Japanese and South Korean markets were among the bright spots, with the Nikkei rising approximately 1.6% and South Korea's benchmark inching up 0.8%. The surge in Japan was attributed to strong performances in tech and export stocks, while South Korea benefited from positive cues from Wall Street.
China's markets showed a more complex picture, with the blue-chip CSI300 index edging up 0.2%. This uptick was partly due to improved manufacturing and services data for June, indicating some economic stabilization. However, broader sentiment in Asia-Pacific excluding Japan was cautious, with the MSCI index dipping 0.2%.
Chinese economic indicators painted a nuanced picture. The official manufacturing PMI slightly improved to 49.7, just below the 50 mark separating contraction from expansion but beating expectations. Conversely, the services sector remained under pressure, with the Caixin services PMI slipping to a nine-month low of 50.6, signalling slowing growth and cautious hiring.
On the trade front, the U.S.-Canada trade negotiations made significant progress. Canada agreed to drop a proposed digital services tax, extending talks through July 21 with potential finalization by Labor Day. This development reduced some tariff and trade-related uncertainties, supporting market optimism.
The U.S. manufacturing sector also showed resilience, with PMI readings in June reflecting ongoing expansion, helping to underpin investor confidence despite some tariff concerns.
However, the ongoing U.S. tariff concerns remained a key watchpoint. Elsewhere in the financial world, the Hang Seng Index finished modestly lower on Friday, with losses from financial shares, property stocks, and technology companies. The Index is expected to open to the downside again on Monday, currently just shy of the 23,920-point plateau.
In the midst of these global financial movements, several companies saw price changes. Alibaba Health Info plummeted 6.64% on Friday, while Alibaba Group, ANTA Sports, and China Life Insurance all experienced drops. Other notable companies, such as China Mengniu Dairy, CITIC, CNOOC, CSPC Pharmaceutical, Galaxy Entertainment, Haier Smart Home, Hang Lung Properties, Henderson Land, Hong Kong & China Gas, Industrial and Commercial Bank of China, JD.com, Lenovo, Li Auto, Li Ning, Meituan, New World Development, Nongfu Spring, Techtronic Industries, Xiaomi Corporation, and WuXi Biologics also saw price changes.
Crude oil prices slumped on Friday, finishing at $66.49 per barrel for August delivery, due in part to easing geopolitical concerns in the Middle East. West Texas Intermediate crude saw a decrease of $0.51 or 0.76 percent on Friday.
In conclusion, on July 5, 2021, Asian markets reflected cautious optimism supported by easing trade tensions—especially between the U.S. and Canada—and mixed but improving economic data from China. The tariff concerns remained a key watchpoint but were somewhat alleviated by progress in trade talks.
The ongoing optimism in Asian business sectors, such as Japan and South Korea, is partially fueled by the strong performances in tech and export stocks, aligning with the finance industry's focus on these sectors. Chinese markets, on the other hand, demonstrated a nuanced picture with varying economic indicators, indicating both some stabilization and persistent pressures within the services sector.
