Asian markets grapple with Evergrande fallout and contemplate China’s power crisis – .

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Asian markets grapple with Evergrande fallout and contemplate China’s power crisis – .


A man stands in front of a screen displaying Nikkei stock average and global stock indices outside a brokerage house, amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, December 30, 2020. REUTERS / Issei Kato // File Photo

HONG KONG, Sept. 28 (Reuters) – Asian stocks fell mainly on Tuesday as investors continued to worry about the unresolved debt crisis of the China Evergrande group (3333.HK) and considered the potential impact of a growing electricity shortage in China.

The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) was down 0.13% on Tuesday, after a mixed session on Wall Street

At the start of trading on Tuesday, the Australian benchmark S & P / ASX200 (.AXJO) was down nearly 1%, while the Japanese Nikkei (.N225) was down 0.6%.

China’s blue-chip CSI300 index (.CSI300) edged up 0.1% at the opening, while the Hong Kong Hang Seng Index (.HSI) gained 0.44%.

The future of Evergrande, the world’s most indebted real estate developer, faces forensic scrutiny by investors after the company missed the deadline to make an interest payment last Friday to holders of offshore bonds. Read more

Evergrande has 30 days to make payment before it goes into default and authorities in Shenzhen are investigating the company’s wealth management unit.

Without referring to Evergrande, the People’s Bank of China (PBOC) said in a statement on its website Monday that it would “safeguard the legitimate rights of housing consumers.”

Meanwhile, worsening power shortages in China have halted production at a number of factories, including suppliers to Apple Inc (AAPL.O) and Tesla Inc (TSLA.O) and is expected to reach out to the country’s manufacturing sector and associated supply chains.

Analysts have warned that the ongoing blackouts could affect the country’s listed industrial stocks.

“What we’re seeing in China with developers and blackouts is going to be a negative weight in Asian markets,” Tai Hui, chief Asian markets strategist at JPMorgan Asset Management, told Reuters.

“Most people are trying to determine the potential contagion effect with Evergrande and how far it could go. We continue to monitor the policy response and have started to see some shift towards support for homebuyers which is what we expected. ”

On Wall Street, the Dow Jones Industrial Average (.DJI) gained 144.36 points, or 0.41%, to 34,942.36, the S&P 500 (.SPX) lost 4.57 points, or 0.10 %, to 4,450.91 and the Nasdaq Composite (.IXIC) fell 68.29 points, or 0.45%, to 14,979.41.

The surge in bond yields has prompted a shift from growth stocks to cyclical stocks in the United States, a move that analysts say could become more permanent after a prolonged period of falling bond yields.

U.S. Treasury yields hit a three-month high, hitting 1.516% overnight after the Federal Reserve’s decision last week to indicate that fiscal stimulus could be cut as early as November. Read more

U.S. investors are eagerly awaiting speeches from several senior Fed officials later this week, as well as keeping tabs on any development at China Evergrande, broker Ord Minnett said in a note.

In Asian trade, the dollar was up nearly 0.1% in line with its performance in Monday’s international session after rising alongside bond yields.

Gold was flat, while Brent crude was down 0.2%.

Reporting by Scott Murdoch; edited by Richard Pullin

Our Standards: Thomson Reuters Trust Principles.

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