China Stocks Advance To Record, Helps Yuan Gain

[DailyFx]

China Stocks Advance To Record, Helps Yuan Gain
Stock markets in China vaulted higher and closed at a record, the biggest mover of the day for the region as a lack of buyers were nowhere to be seen. Continuing on the momentum from the previous session, benchmark indexes advanced as investors continue to remain bullish on the economy. The CSI 300 gained 78.32 points or close to 2.1 percent at 3,778.60 with the Shanghai exchange gaining 1.6 percent to 4,048.29. Leading gainers on the day was China United. Controlling the second largest mobile phone operator in the country, China United shares rose higher by 2.3 percent, closing at 6.30 as Guomai Technologies advanced 4.1 percent to 46. The underlying optimism in the stock market helped to boost the currency, as the Chinese yuan was able to make further ground against the dollar trading at 7.66935 in the New York session. Incidentally, the underlying currency was also boosted by sentiment that further calls for flexibility will be answered by the government as Premier Wen continued to assure a more loosely held fix on the yuan.

Asia?s Richest Man Notes Chinese Stock Bubble
Countering the bullish sentiment on the day however, were comments by Asia?s richest man, Li Ka-shing. Rather in line with previous sentiment shared by Governor Zhou Xiaochuan, Li noted that China stock valuations "must be a bubble" and suggested that stock prices may fall. Noted for his investment acumen throughout the region, concerns are now emerging that the market is setting it self up for a considerable correction. Granted, the effects may not take place for some time, fears may now be mounting on stock valuations that are now 43 times estimated earnings, a considerable overweight when considering the 16 times multiple for a more established Hang Seng Index.

Singapore Exports Continue To Show Considerable Weakness
Exports in the Singapore economy unexpectedly declined for the month of April, for the third time in five months. Non-oil domestic exports for the month, declined by 0.4 percent on the annualized comparison, compared to a 1.6 percent advance in March. The electronics subcomponent exacerbated the effects of the report, dropping an impressive 11.6 percent in the annualized comparison, following a 17.7 percent decline in the previous month according to government reports. Subsequently, both reports confirmed fears that the economy, which depends on US trade relations is suffering under slowing growth in the world?s largest economy. Weakness in sales also appeared in European markets with semiconductor shipments falling 16.7 percent, the second consecutive 16 percent drop.

Regional Markets Continue To Advance Higher
Regional stock markets rose on the day, boosted by gains seen in Shanghai. Notably, Hong Kong shares moved to a record for the fourth time this month as China Mobile and Cheng Kong holdings led advancers. Shares of Cheung Kong added HK$2.50 to HK$107.90 after billionaire investor Li Ka-shing added to his already massive holdings of the company. Subsequently, China Mobile Ltd. gained on speculation that licenses for 3G technology networks will be issued in the near term widening the spectrum of the company?s customer base. Shares of the world?s number one mobile phone operator market shares jumped 0.1 percent to close at HK$74.05. All in all, the Hang Seng index was able to add 57.35 points to 20,994.61 at the close. Separately, dismissing concerns over the lower than expected export figures, the Straits Times Index was able to eek out a gain on the heels of regional equity optimism. Boosted by technology companies, the benchmark stock market rose 24.34 points to close at 3,525.51.