Asia's stock markets were softer on Monday, with investors awaiting the U.S. inflation data for September to gauge the Federal Reserve's next moves on interest rates. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent, while Australia's shares and Japan's Nikkei stock index both lost 0.25 percent. Hong Kong's Hang Seng Index saw a 1.4 percent decline, influenced by falls in property stocks and a 3.1 percent drop in Alibaba (NYSE:BABA) Group following the surprise departure of outgoing CEO Daniel Zhang from its cloud unit.
Investors are pricing in a 93 percent probability that the Fed will maintain current rates after its next meeting ends on Sept. 20, with a 53.5 percent chance of another pause at the November meeting, according to CME group's FedWatch Tool.
On Sunday, the MSCI China Index, which covers 755 stocks traded at home and abroad, was reported to have fallen 1 percent last week, contributing to a 4.7 percent slide this year through August. The Hang Seng Index has declined 8 percent this year, lagging behind the MSCI World Index's 13.3 percent gain and the S&P 500 Index’s 16.1 percent advance.
Despite the recent selling pressure on Chinese stocks, Shaun Cochran, head of research at CLSA, a unit of China’s largest securities firm Citic Securities, remains positive about China's outlook. He believes that China's cheap valuation and secular growth could provide better returns relative to other equity markets.
Foreign investors sold about $600 million worth of onshore stocks last week following weak external trade data and a weakening yuan. They dumped $12 billion worth of Chinese stocks in August, marking a record since the Stock Connect inception in 2014.
Cochran emphasized that China still has massive savings as a current account surplus economy, which need to be deployed. He highlighted potential opportunities in safe and sophisticated financial products, fintech, new insurance products, healthcare, and even in the semiconductor sector.
Citic Securities, China’s biggest publicly traded securities firm, has over 100 research analysts covering more than 1,200 companies in 19 key industry sectors across 13 markets. The firm expects to host more than 400 experts at its 30th investment forum this week.
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