Chinese banks lead Asia equity as market rates rise

Bloomberg

Stocks in Hong Kong and China led gains in Asian equity markets as rising money market rates on the mainland boosted sentiment on lenders.
The MSCI Asia Pacific Index added 0.1 percent to 160.62 as of 4:19 p.m. in Hong Kong, after posting its biggest weekly gain in five weeks. The Philippines market is closed for a holiday.
The Hang Seng Index climbed to its highest since May 2015, before paring its advance, as four of the 10 best performers were financial stocks. Bank of Communications Co. and China Life Insurance Co. gained at least 1 percent. Japan’s Topix rose, boosted by pharmaceutical stocks as investors assessed a meeting of central bankers at Jackson Hole, Wyoming.
“The interest-rate environment in China is going up, the yields are recovering and a lot of the financial companies like banks and insurers are benefiting from this,” Margaret Yang, a market analyst at CMC Markets in Singapore, said. “This week, we should watch the moves from White House on the tax reform plan.”
Gary Cohn, director of the National Economic Council, said in an interview with the Financial Times published that he expects tax reform to pass this year.

China central bank embraces
a supercharged yuan
Bloomberg

With the dollar languid in the absence of supportive rate-hike rhetoric from Jackson Hole, China’s central bank set the strongest yuan fixing in a year on Monday, exceeding the average forecast of 18 traders and analysts surveyed by Bloomberg.
The signal that Chinese policy makers are comfortable with yuan strength saw the currency trade below 6.65 per dollar onshore, a level the yuan seemed to have stalled at following a hefty advance. Yuan is the best performer in Asia this month, and shows no signs of slowing down.
Gains could now be further supported as individuals and companies within China jump on the bandwagon, says Tommy Xie, an economist at Oversea-Chinese Banking Corp. Chinese have hoarded foreign currency amid yuan weakness the past two years, and as those positions are unwound the yuan could gather even more momentum, Xie said.