[B]Yuan Appreciates On Central Bank Comments
[/B]The Chinese yuan was supported in the overnight making gains across the board. Appreciating against the US dollar, the yuan was able to post the biggest advance in just under three week, gaining to 7.5665 while rising against the British pound at 15.33. In its second quarter monetary policy assessment, the country?s central bank noted that a bigger market role will be taken into consideration when gauging valuation of the Chinese renminbi. “China will increase the yuan?s flexibility” according to the report, as the People?s Bank of China would maintain the value of the currency at a “reasonable level”. Although miracles won?t be happening any time soon, the fact that the central bank blatantly made statements in regards to the potential change gives hope to yuan bidders. It also confirms what forward traders have been expecting. Currently contracts are suggestive that the currency will appreciate slightly over 6 percent in the next year.
[B]Shanghai Stocks Advance Further, CSI Hits Record[/B]
Chinese stocks rocketed higher during the session as positive earnings news continued to support market bidding. As a result, the CSI 300 benchmark index advanced by an impressive 2.3 percent to close at 4,777.29. This time it was Wuhan Iron & Steel Co. that led the sector higher as first half profit almost tripled on higher commodity prices. The positive report comes a month after China Merchants boosted banking sector prospects as profit for the bank more than doubled in the first six months of the year. Subsequently, Baoshan Iron & Steel Co. shares were lifted on the good news as stock in the country?s biggest steelmaker rose 7 percent to trade at 16.28 yuan. Additional gains were seen on both Shanghai and Shenzhen composites in the overnight session. The Shanghai Composite Index added 2 percent to 4,754.09 as the smaller Shenzhen Index advanced by 1.5 percent to 1,348.88.
[B]Growth Forecasts Lifted For Singapore Economy[/B]
Raising growth forecasts for the Singapore, Prime Minister Lee Hsien Loong continues to remain optimistic for the future success of the overall economy. For the third time this year, forecasts have been revised higher as the economy continued to expand by 7.6 percent in the first six months of the year. According to now revised expectations, growth is expected to come in higher between 7 and 8 percent, compared to earlier estimates pitting growth at just under 7 percent for the year. “Our efforts to transform our economy are paying off?within a decade, our city and our whole country will be completely transformed.” Subsequently, expansion is forecasted to grow further in the second half of the year as manufacturing and services industries are set to expand with information technology upticks adding to already supported strength.
[B]Hong Kong Shares Decline On Subprime Concerns[/B]
With Singapore markets closed for National Day, focus was placed solely on losses at the close for Hong Kong shares. Trading higher earlier in the session, the benchmark Hang Seng index reversed gains and closed down following news of French bank BNP Paribas amid subprime loss concerns. Once again large cap stocks were lower on the day with HSBC leading decliners, down 0.14 percent at HK$144.50. China Mobile shares were also lower, down 1.07 percent at HK$88. As a result, the Hang Seng closed in the red, down by 97.31 points at 22,439.36 from reaching as high as 22,796.73.