China A50 future surges on Hong Kong-Shenzhen link

By Margaret Yang, CMC Markets

China stocks rise cheerfully due to optimism

Catalyzed by the news that the long awaited Hong Kong-Shenzhen link will soon be officially announced, Hong Kong and China stock markets rallied with a boost in investors’ confidence.

According to the latest news, the stock connection between Hong Kong and Shenzhen exchange will be launched as early as December this year as an important step to further liberalise the country’s stock market. Policy makers planned to remove the total trading quota for the Hong Kong-Shenzhen link while maintaining daily trading quota unchanged from that of Hong Kong-Shanghai link.

Shanghai composite rose 2.44% on Monday with trading volume picking up as well. The rally was led by banks, insurance, brokers and property companies. China A50 Index, which tracks the performance of the largest 50 companies listed in Shanghai exchange, went up 2.9%. CSI 300 index, which is a measure of 300 stocks listed in Shanghai and Shenzhen exchange has rallied 3.01%.

Stocks and shares that could be driven by this connection include Hong Kong Exchange (388 HK), CSOP China A50 ETF (2822 HK), Citic Securities (6030 HK) and Hang Seng H-Share Index ETF (2828 HK).

Japan 2Q GDP estimation falls below forecast

Japan’s economy expanded at a rate of 0.2% in 2Q, missing forecast of a 0.7% increase. It also marks a sharp revision down from the 1.7% growth achieved in the first quarter this year. Languishing growth was mainly attributed to lower business spending and contracting exports due to a stronger yen amidst weak external demand.

Business spending declined 0.4% as compared to last quarter, which outweighed the 0.2% increase in private consumption. Nikkei 225 Index closed 0.30% lower.

Stock market climbs higher as WTI above $45

US and European equity markets closed higher on Monday with a three-day crude oil price rally. WTI crude traded above $45 mark for the first time in more than 3 weeks. This comes in light of the rising optimism towards the discussion among OPEC members in the coming September, which is believed to help to stabilize the market.

Dow, S&P500 and Nasdaq have all hit record new heights, with gains mainly from materials, industrials and energy sectors.

Tonight, investors will be watching closely on the US CPI, housing starts, and industrial production data to uncover more clues in the recent developments of the world’s largest economy.

CSOP FTSE China A50 ETF

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