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China stocks high on stimulus joy, Sri Lanka dollar bonds rebound
While the stimulus measures have raised expectations that Beijing will follow soon with a fiscal package to complement the monetary and financial moves, analysts have raised doubts about their efficacy given weak consumer demand.
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People walk on an overpass with a display of stock information in front of buildings in the Lujiazui financial district in Shanghai, China, on Aug. 6, 2024. (Reuters/Nicoco Chan)
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hinese stocks continued to ride the stimulus momentum on Wednesday, as hopes of economic rebound sent the main stock indexes to over two-month highs, while Sri Lanka's president dissolving parliament saw its dollar bonds regain lost ground.
Chinese shares climbed over 1 percent and Hong Kong's stocks hit a four-month high, gaining for a second day on the back of Beijing's wide-ranging stimulus package that boosted commodity prices and emerging market assets on Tuesday.
The offshore yuan retouched a 16-month high during the day, briefly trading below the key 7-per-dollar level for the first time since May 2023.
"Against the prospect of more Fed cuts amid China's policy support for its economy and markets, CNY has scope to play catch-up to the recovery in Asian currencies," DBS strategists noted, referring in part to the prospect of more US rate cuts.
While the stimulus measures have raised expectations that Beijing will follow soon with a fiscal package to complement the monetary and financial moves, analysts have raised doubts about their efficacy given weak consumer demand.
The MSCI EM stocks index has been on a run, on track for a five-day winning streak, with China's stimulus cheer adding to the optimism sparked by the US Federal Reserve's rate cut last week. The currencies index also rose 0.2 percent to scale a fresh all-time high.
On the political front, Sri Lanka's newly elected President Anura Kumara Dissanayake dissolved parliament to clear the way for a snap general election and is set to give a speech at 1400 GMT. Dissanayake on Tuesday named college professor and first-time lawmaker Harini Amarasuriya as prime minister.
Sri Lanka's sovereign dollar bonds, such as the 2025 maturity one, gained around 2 cents, Tradeweb data showed.
The country's benchmark stock index jumped 2.4 percent to hit a near two-month high, on track for its first seven-day winning streak since April.
South Africa's main stock index hit a record high, climbing 1.4 percent, with investors returning after Tuesday's market holiday, while the rand firmed 0.2 percent against the dollar and defended its 20-month high.
Investors will also be on the lookout for the Czech Republic's monetary policy decision due during the day, with a 25 basis points rate cut expected. That would come on the heels of Hungary's similar-sized rate reduction the day before.
While the Czech crown was largely flat against the euro, the Hungarian forint slipped 0.2 percent.
