Sydney: Asian stocks steadied on Monday in quiet trade ahead of China’s Unicom Ltd’s results, while a rebound in Hong Kong’s real estate sector lifted some of the market’s risk-sensitive shares.
Uneasiness over China’s bond market was also eased somewhat by a jump in the country’s most liquid, five-year treasury futures.
Mainland and Hong Kong markets were closed on Monday for a public holiday.
However, index futures pointed to gains at the start for stock markets in both mainland China and Hong Kong. Futures on Singapore and Taiwan exchanges were also firmer.
“We expect market activity to be light ahead of the holiday in both China and Hong Kong,” said John Kitt-Chan, strategist at Maybank Kim Eng Securities.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5% in early trading, but eased in mid-morning trade and was on track for a weekly loss of 1.1%.
The Nikkei was up 0.4% after losing more than 3% last week on the back of a stronger yen and weak risk sentiment.
But the spotlight was on shares of Evergrande, China’s second-largest developer by sales, after its chairman’s shocking admission that his company had run up a debt mountain that made it vulnerable to a broad economic downturn.
The stock plunged more than 30% on Friday after Zhang Xinsheng confessed on WeChat to taking “serious wrongdoing” by concealing debt ratios in the company, including local government debt that he said was improperly classified as capital expenditure by management.
Evergrande owns an 8.18% stake in Macau casino operator Galaxy Entertainment Group Ltd, one of its largest shareholders.
Shares of Galaxy jumped 12% on Monday on speculation Evergrande will seek to swap its common stock for convertible bonds.
“While I think the implications for the stock market are not as negative as they would have been a few days ago, I think investors are getting more curious about this announcement and to what extent they thought it would be settled,” said Edmond Chan, Credit Suisse strategist.
“It remains to be seen how this will impact Evergrande’s ability to sell new bonds in the market, and, perhaps more importantly, how it impacts Galaxy’s ability to sell new shares.”
There was also strong profit-taking in tech shares.
Index heavyweight Samsung Electronics Co Ltd lost 2.7% on Monday, though was still in positive territory for the year.
Among Southeast Asian markets, the Indonesian benchmark slipped 0.3%, though regional markets have outperformed after last week’s steep falls.
The Philippines dropped 0.7%, though it was among the highest-performing regional bourses for the year.
Towards the end of last week, the United States began a two-day Congressional “shutdown clock” on Friday, with a potentially lengthy debate ahead over the tax reform plan that President Donald Trump hopes will be the biggest tax reform since 1986.