China rally runs on hope; bonds bet on slowdown
By Tom Westbrook
SINGAPORE (Reuters) — China stocks led Asian shares higher on Tuesday with investors welcoming Beijing's efforts at supporting markets, while bonds rallied and the dollar dipped on possibly softening U.S. data.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1%, with the Hang Seng in Hong Kong up more than 2% and mainland China blue chips up 1.5%.
China has halved stock trading stamp duty, loosened margin loan rules, put the brakes on new listings and approved new retail funds in recent days — signalling, at least, resolve to steady the market even if it does little to support the sputtering economy.
After selling into Monday's initial bounce, after the measures were announced over the weekend, foreign investors were net buyers of about $500 million in Chinese stocks on Tuesday perhaps in the hope that more substantive aid will follow.
«We doubt these policies per se can turn around confidence or determine the market direction,» said Bank of America analysts
«Financial markets are only a reflection of the underlying economy, and we need policies that can address the fundamental economic issues… in our view, the next 2-3 weeks is still an important window for policy actions.»
Embattled Chinese developer Country Garden led gains in Hong Kong, along with electric vehicle maker BYD (SZ:002594), which reported a tripling in first-half profit.
Pressure remained on China Evergrande (HK:3333), and the builder which once traded above HK$30 a share fell 10% to HK$0.31 in its second session back from suspension — highlighting the heavy doubts that remain over the country's debt-stricken property sector.
U.S. futures were flat. European futures rose 0.2% and FTSE futures rose 0.8% to point to a
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