At 0221 GMT, shares of China' s largest residential developer China Vanke Co rose 1.6 per cent in Shenzhen, while smaller competitor China Resources Land jumped 2.6 per cent and Greentown China gained 1.6 per cent.

The official Shanghai Securities News reported on Tuesday that one of China' s top four state banks plans to relax rules on mortgage lending, which came a day after 21st Century Business Herald cited unidentified sources as saying that China' s " Big Four" banks would ease home lending in a move orchestrated by regulators.

China' s new home prices fell in August for a fourth straight month and declines spread to a record number of cities, according to data last week. Many Chinese cities have relaxed home purchase restrictions as local governments seek to support a key pillar of the economy. - Reuters

 

The dollar retreated following a recent rally, while on Wall Street the Dow edged down after clocking another record at the end of last week.

Shanghai rose 0.43 per cent, Sydney gained 0.26 per cent, Hong Kong was 0.10 per cent higher and Seoul was 0.32 per cent lower.

Tokyo was closed for a public holiday.

 

IT SPEAKS volumes about how Monday' s session went that the only feature of interest dealers could identify when asked about the day was the crossing of two large parcels of shares.

The first involved the crossing of 310 million shares of volume leader LCD Global Investments at 30 cents each. The hotel and property firm on Friday announced that substantial shareholders David Lum, Beverian Holdings, Raymond Lum, Lum Chang Investments and Kelvin Lum have sold the 310 million shares to JTrust Asia, which plans to change LCD' s name to JTrust International. Including the parcel of shares, the counter added half a cent at 28.5 cents on volume of 313.3 million.

The second involved the crossing of 15 million Straits Trading shares first thing in the morning at S$2.70 each, helping the counter to end the day 11 cents higher at S$2.85 on total volume of 15.6 million. Brokers were unable to offer an explanation for the interest in the company' s shares.

Helped by these parcels, the market' s turnover amounted to 1.6 billion units worth S$953 million. The Straits Times Index, in the meantime, exhibited virtually no energy throughout the day, eventually ending a net 8.48 points weaker at 3,296.57. The broad market' s advance-decline score was 162 to 280, excluding warrants.

 

[HONG KONG] Hong Kong stocks tumbled 1.44 percent on Monday, in line with a regional sell-off and before the release of Chinese manufacturing data which investors fear could indicate further weakness in the mainland economy.

The Hang Seng Index fell 350.67 points to 23,955.49 on turnover of US$9.34 billion.

In China the benchmark Shanghai Composite Index lost 1.70 per cent, or 39.58 points, to end at 2,289.87 on turnover of US$24.1 billion.

The Shenzhen Composite Index, which tracks stocks on China' s second exchange, dropped 1.22 per cent, or 15.71 points, to 1,275.52.- AFP

 

SCOTLAND voted " no" to independence and the US Federal Reserve reassured markets that interest rates will remain depressed for a " considerable time" after October. Those were last week' s features and, it has to be said, there were no major shocks.

A few observations are possible about the way markets have behaved over the past few months and what local investors can expect in the near term.

First up is something mentioned several times before in this column, namely that Wall Street is either the world' s default market in times of doubt, or it' s the " safe haven" of choice for global money that is unsure of where to park the funds.

Whatever your preference, US stocks have outperformed most other markets by a large margin since their own banking sector imploded in 2008 under the weight of the fraudulent instruments that its banks foised on an unsuspecting world.

 

[HONG KONG] Short-sellers who profit from stock price declines have resumed targeting Chinese companies after a three-year lull, but many of the researchers who instigate the strategy are now cloaked in anonymity, shielding themselves from angry companies and Beijing' s counter-investigations.

Three reports published this month separately accused three Chinese companies - Tianhe Chemicals, 21Vianet and Shenguan Holdings - of business or accounting fraud. All three companies said the allegations were baseless but their shares were hit by a wave of short-selling by clients of the research firms and then by other investors as the reports were made public.

The reports were written by research firms that did not publicly disclose names of research analysts or even a phone number.

In the last wave of short-selling that peaked in 2011 and wiped more than US$21 billion off the market value of Chinese companies listed in the United States, the researchers advocating short-selling were mostly public.

 

LAST week, US stocks set new records after the Federal Reserve executed a shift away from extraordinary stimulus to a rate-hiking policy with finesse, and the gains should continue if economic data this week justify the central bank' s confidence.

The sector leading the latest advance is the sector that the Fed had stepped in to save with its extraordinary measures in the first place: the banks. In 2008 and 2009, most of the biggest banks in the US came within days or hours away from failure, according to the memoirs of former Treasury Secretary Timothy Geithner. During the recovery, the banks have operated in, if not a chastened mode, a straitened one.

The billions are no longer rolling in from massive bets on copper prices or mortgage derivatives. The harpooning of JP Morgan' s " London Whale" signalled the end of the era when trading desks ruled the world. Some global banks have quit markets like electricity and commodity derivatives that were once thought to be the future. The profits on loans shrank at the same time as the trading desks.

Last week, Fed chairwoman Janet Yellen stated in the most unequivocal terms to date that the central bank is preparing to push the benchmark rate up. For the banks, that' s a licence to charge their customers more for borrowing money. While most economists don' t anticipate a rate hike appearing until mid-2015, the market rates for mortgages and other loans are already picking up. Besides, another of Wall Street' s geese has started laying golden eggs in the last year or so: the deal market.

The most glaring example is Alibaba Group' s frenzied initial public offering last week, which saw shares priced at US$68 apiece debut at nearly US$100. That gave Alibaba a market value of US$230 billion, which eclipses that of Facebook, whose own IPO was thought to be surprisingly large.

By some measures, the Chinese online bazaar is the world' s busiest marketplace. Nevertheless, such stock performance can only be justified by prolonged exponential growth.

While there' s unlikely to be another IPO on the scale of Alibaba or Facebook any time soon, investment bankers are equally busy in the equally profitable business of mergers and acquisitions. This is a classic corporate strategy in a time of relatively slow economic growth, when competitors can be bought at a discount.

" In a business environment that we believe is defined by slow top-line growth, companies have looked externally to create value," said strategists at brokerage Barclays in a research note. " This has contributed to a surge in mergers and acquisitions."

The last time around, " Merger Mondays" turned out to be a sign of a market peak, as companies rushed to take advantage of endangered exotic debt structures to buy competitors no matter what the price in 2007 and 2008.

The current round of deals have a simpler recipe and less inflated price tags: whether its fast food chain Burger King' s acquisition of Canada' s Tim Horton or drug maker AbbVie merging with Shire, US corporations are shopping for tax savings.

" We believe the current M& A cycle will last. Debt financing costs are low, cash is elevated and should be put to better use, and there are potential tax savings available," the Barclays analysts said.

US corporations can also afford to go shopping in Europe and Asia because the US dollar has started to go a lot further there, recently hitting its highest level against the yen in six years.

" You' re in a pretty strong dollar bull market right now and the long-term direction of the US economy and US rate policy is counter directional to what Europe and probably the rest of the world is doing," said Oliver Pursche, president of money manager Gary Goldberg Financial Services.

Speaking in Dallas on Thursday, former Bank of England official Charles Bean said the spillover effect of the Fed' s quantitative easing programmes was mostly positive for its trading partners. By putting more money in the hands of US consumers, it helped export economies in Europe and Asia, Mr Bean said. Low rates in the US also proved contagious, he said.

The corollary to these findings is that the Fed' s rate hike plans could have negative spillover effects for trading partners. A recent poll showing that household wealth - a measure of savings and home values - surpassed the pre-recession high suggests the Fed was right in thinking the US is ready for a slightly more constrained consumer.

This week, data on durable goods orders, used home sales and the behaviour of bank stocks will test the Fed' s theory that the US economy is finally on an even keel.