The Asian stock exchanges lose significantly over the weekend.
(Photo: dpa)
Singapore, Hong Kong The Tokyo stock exchange was initially weaker on Friday. Lael Brainard, a member of the Fed’s board of directors, signaled on Thursday that interest rates could rise in March to fight inflation. The news appeared to deal a blow to investors as Asian stock markets plunged deep into the red as investors sought protection in safer assets such as government bonds. “Everyone is really nervous at the moment. That’s because everything could be squeezed by aggressive Fed policies,” said Kyle Rodda, a market analyst at IG in Melbourne.
The Nikkei index, which comprises 225 values, was 1.9 percent lower at 27,946 points. The broader Topix index fell 2 percent to 1,965 points. The Shanghai stock exchange was down 0.5 percent. The index of the most important companies in Shanghai and Shenzhen lost 0.5 percent.
The shares of the ailing housing group Evergrande rose slightly by 1.2 percent on Friday shortly after a default was averted. The world’s most indebted property developer on Thursday received crucial approval from onshore bondholders to defer payments on one of its bonds, according to Hengda Real Estate Group, the core company of Evergrande’s real estate division. However, the paper was only a fraction of the $300 billion that the real estate group owes to its mostly Chinese lenders.
A good 72 percent of investors voted to grant the company a deferral of the yuan bond worth the equivalent of a good $700 million, according to Hengda. The company wanted six months more time for the repayment in order to prevent immediate bankruptcy. “The approval was expected, bondholders do not want to part with Evergrande now, hoping that the issue can eventually be resolved,” said Kington Lin, managing director of asset management at Canfield Securities Limited.
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Evergrande is currently trying to raise cash by selling assets and shares to pay suppliers and creditors. The debt drama surrounding the industry giant, which has been dragging on for months, is increasing the pressure on the Beijing government to prevent a conflagration in the Chinese real estate and financial markets.
In Asian currency trading, the dollar fell 0.3 percent to 113.79 yen and stagnated at 6.3603 yuan. Against the Swiss currency, it was 0.1 percent lower at CHF 0.9101. At the same time, the euro rose by 0.1 percent to $1.1469 and rose by 0.1 percent to CHF 1.0441. Sterling gained 0.1 percent to $1.3724.
China’s exports rose 20.9 percent year-on-year in December. Imports rose 19.5 percent over the same period, Friday’s customs data showed, beating analysts’ expectations for a 26.3 percent increase. China’s export growth, on the other hand, slightly exceeded analysts’ forecasts, which according to a Reuters poll only expected an increase of 20 percent. China posted a trade surplus of $94.46 billion last month while the survey forecast a surplus of just $74.50 billion.
More: Economics Nobel Prize winner Shiller warns of a “dramatic overvaluation” on the stock exchanges, the conflict with China – and Trump.