By Daniel Inman
Chinese stocks surged on Monday as recent economic data offered further signs that Asia’s biggest economy is stabilizing, while Japanese stocks rallied as a successful Olympics bid boosted sentiment.
Positive economic news from China also offered support to the region. Trade data out over the weekend showed a pickup in exports in August, up 7.2% on year, the latest sign that the world’s second-largest economy is recovering from a slowdown earlier in the year.
In addition, data released in the morning showed that Chinese inflation remain subdued, with the consumer price index rising 2.6% on year in August, in line with the median forecast of 11 economists surveyed by Dow Jones.
Also, shares in some Chinese banks shot higher as the market considered the impact of the upcoming Shanghai free-trade zone, with banks headquartered in the city hitting the upward trading limit. Bank of Communications /zigman2/quotes/207155262/delayed CN:601328 +0.65% /zigman2/quotes/208048873/delayed BKFCF +2.25% and Shanghai Pudong Development Bank /zigman2/quotes/204296742/delayed CN:600000 +0.14% both rallied 10%.
The Chinese data helped the Australian dollar /zigman2/quotes/210560947/realtime/sampled AUDUSD -0.8393% shoot as high as 92.18 U.S. cents early in the session, compared with 91.85 U.S. cents late Friday in New York, before moderating to 92.04 U.S. cents.
Shares in Chinese oil giant PetroChina Co. /zigman2/quotes/204979431/delayed HK:857 -2.14% were halted in Hong Kong. The company’s stock was suspended in late August due to an investigation into senior executives.
There were also strong gains in Japan, as data released early Monday showed that the Japanese economy grew much faster in the second quarter than initially estimated. April-to-June gross domestic product grew a revised 3.8% on an annualized basis, compared with last month’s preliminary reading of 2.6%.
Also in Japan, investors were reacting to the weekend news that Tokyo will host the 2020 Olympics, a decision that benefited the broader market, with the Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -1.50% up 2.5%.
China's shadow banking problem
Perhaps the biggest wild card in the world economy right now is China. Will the world’s second-biggest economy keep growing strongly, or will it suffer for all the money it’s borrowed in the past five years?
Sectors that stand to benefit from the event — such as construction and real-estate developers — were buoyed by the result. Construction firm Kajima Corp. /zigman2/quotes/206026698/delayed JP:1812 -1.14% /zigman2/quotes/201373290/delayed KAJMF -5.17% rocketed 9.7%, while real-estate company Mitsui Fudosan Co. /zigman2/quotes/205394574/delayed JP:8801 -2.87% /zigman2/quotes/208297288/delayed MTSFF +1.75% jumped 6.4%.
Also supporting Japanese stocks was a softer yen, with the dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0359% moving toward the ¥100 mark — last at ¥99.56 to the dollar, compared with ¥99.10 late Friday in New York.
Australia’s S&P ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.53% moved 0.7% higher after a weekend election resulted in the country’s first conservative government in six years, bringing an end to a period of political uncertainty since the poll was called at the beginning of the year.
Some mining stocks outperformed after the election result, as the Liberal National coalition has pledged to remove taxes on carbon emissions and parts of the mining industry. BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP +0.13% /zigman2/quotes/208108397/composite BHP +2.17% rose 1.4%, and Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -0.43% /zigman2/quotes/202627887/composite RIO +2.26% also rose 1.4%.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -2.45% was up 1%.