Chinese stocks up 2% after central bank leaves rates unchanged; Asia markets rise

China stocks rose on Monday afternoon, mostly led by property stocks trading in mainland bourses.

China Vanke shares listed in Shenzhen gained 2.75% while China Merchants Shekou Industrial Zone rose 3.3%. Chinese developer Gemdale also gained 3.24%.

The Hang Seng Mainland Properties Index also rose 2.99% while the SSE Banks Index rose 2.27%.

— Jihye Lee

Malaysia has recorded a trade surplus for its 33rd straight month in January 2023, coming in at RM18.2 billion ($4.1 billion).

This was slightly lower than expectations, which forecasted a $20.2 billion surplus.

The country's department of statistics said Malaysia's exports in January grew by 1.6% on an annualized basis to RM112.8 billion, and imports also registered an increase of 2.3% to RM94.7 billion in the same period.

Total trade for Malaysia expanded by 1.9% to RM207.5 billion, up from RM203.6 billion in January 2022.

The ringgit weakened slightly against the U.S .dollar to trade at 4.4275 after the release of the data.

—Lim Hui Jie

The China Securities Regulatory Commission announced late Friday new rules that formalize requirements for China-based companies wanting to list in the U.S.

Such public offerings had slowed after the increased scrutiny from different regulators following Didi's massive U.S. IPO in June 2021.

The securities regulators' new rules require domestic companies to comply with national security measures and personal data protection law before going public overseas.

The rules, set to take effect March 31, do not ban the variable interest entity structure commonly used by Chinese companies when listing in the U.S.

— Evelyn Cheng

Markets in New Zealand led losses in the region as investors await the central bank's interest rate hike decision on Wednesday. The S&P/NZX 50 Index was trading 1.76% lower, in contrast to most Asian markets on Monday.

This comes after the country suffered a series of natural disasters over the last three weeks, including flash floods in Auckland and Cyclone Gabrielle hitting North Island.

Among 25 economists polled by Reuters, 20 expected the central bank to raise its policy rate by 50 basis points next week to 5.25%.

In November, the Reserve Bank of New Zealand said interest rates needs to "reach a higher level, and sooner than previously indicated, to ensure inflation returns to within its target range over the medium term."

— Lim Hui Jie

Defense stocks in Japan and South Korea are trading mixed after North Korea launched two short-range ballistic missiles off its east coast on Monday.

This comes after an earlier launch where the North fired an intercontinental ballistic missile into the sea on Saturday off Japan's west coast, which led to the U.S. holding separate joint air exercises with South Korea and Japan on Sunday.

South Korean aircraft engine producer Hanhwa Aerospace is trading 1.13% down, but aircraft manufacturer Korea Aerospace is up 0.44%.

Other companies like weapons manufacturer Firstec and Victek, which specializes in electronic warfare systems, have risen 1.48% and 1.99% respectively.

In Japan, Kawasaki Heavy Industries, which mainly manufactures aircraft for Japan's Self-Defense Forces, rose 0.66%, while pyrotechnics firm Hosoya Pyro-Engineering traded 1.10% up. On the other hand, Mitsubishi Heavy Industries traded 0.33% lower.

South Korea's foreign affairs ministry has also imposed sanctions on nine entities following the launch, including two Singaporean companies, saying that they "contributed to the evasion of sanctions" on North Korea.

— Lim Hui Jie

The People's Bank of China left its 1-year loan prime rate unchanged for February at 3.65%, the central bank said in a release on Monday.

It also left its 5-year loan prime rate unchanged at 4.30%, widely in line with expectations.

The offshore yuan traded at slightly stronger levels at 6.8736 against the U.S. dollar after the announcement.

— Jihye Lee

Stock markets have rallied this year, but market watchers are uncertain if this is just another bear market rally or the start of a new bull market.

Against this backdrop, Ghosh said investors should look to be "almost defensively offensive," and named three stocks he recommends.

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— Zavier Ong

The People's Bank of China is largely expected to make no changes to its 1-year and 5-year loan prime rates later today, according to a Reuters poll.

21 our of its 27 respondents expected the central bank to hold the rates, while 6 of its economists called for a marginal cut for the 5-year rate.

Economists pointed to the latest government data showing new loans having jumped to a record 4.9 trillion yuan ($713B) in January.

A recent statement from the central bank had also reiterated its pledge to strengthen financial support, though with an emphasis on targeted measures.

— Jihye Lee

The "revolution" in clean hydrogen is picking up pace, according to investment bank Goldman Sachs, which pointed to a few factors driving the boom.

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— Weizhen Tan

Here are the major events investors in the Asia-Pacific will be watching this week.

The U.S. Federal Open Market Committee will release minutes for its latest meeting concluding Feb. 1 later in the week.

On Monday, China will release its 1-year and 5-year loan prime rates for February. Malaysia will report its trade data later in the day.

On Tuesday, private surveys will release Australia and Japan's purchasing managers' index readings. U.S. will also release its PMI and New Zealand is slated to publish its producer price index for the fourth quarter.

Investors will also be closely watching for minutes from the Reserve Bank of Australia's latest rate decision meeting.

Japan will also release its producer price index on Wednesday. Australia's composite leading index for January and the nation's wage price index for the fourth quarter will be published on this day as well.

New Zealand will also release its trade balance for January on Wednesday.

The Bank of Korea will announce its rate decision on Thursday morning. Economists polled by Reuters are expecting to see the central bank pause and leave its benchmark interest rate unchanged. Singapore's consumer price index for January will be released as well.

Chinese president Xi Jinping will reportedly be delivering a 'peace speech' on the one-year anniversary of Russia's invasion on Ukraine, according to Reuters.

— Jihye Lee

Forward-looking economic data is still pointing to a recession ahead, though perhaps less so, The Conference Board reported Friday.

The board's Leading Economic Index registered a decline of 0.3%, in line with market expectations and at least on relative terms better than the 0.8% slide in December. On a six-month basis, that puts the LEI down 3.6%, compared to the 2.4% contraction over the previous period.

"While the LEI continues to signal recession in the near term, indicators related to the labor market —including employment and personal income — remain robust so far," said Ataman Ozyildirim, the Conference Board's senior director of economics.

"The Conference Board still expects high inflation, rising interest rates, and contracting consumer spending to tip the US economy into recession in 2023," he added.

—Jeff Cox

"Markets have settled following an impressive start to the year, though the lack of a reaction to inflation data or "good news is bad news" mentality suggests a dramatic shift in the complexion of markets relative to last year," said Mark Hackett, chief of investment research at Nationwide in a Friday note.

He added that Friday's trading will determine the week's overall direction - the S&P 500 is relatively flat on the week.

"Leadership has shifted to the risk-on asset classes, with technology and small caps leading, and the Dow underperforming the S&P 500 this year by the largest gap since 1934," he said. "Bond investors, however, remain reactive, with the 10-year Treasury yield up 0.16% this week to 3.90%, the highest level since November."

The shift is good news for bulls, who are looking at a narrative backed by a stronger economy than expected and a market that's less reactive to the economy, inflation data or rising rates.

—Carmen Reinicke

Federal Reserve Governor Michelle Bowman said Friday there's still much work to be done before policymakers can feel they have inflation under control.

"I think there's a long way to go before we reach our 2% inflation objective and I think we'll have to continue to raise the federal funds rate until we see a lot more progress on that," Bowman said during an appearance in Tennessee, according to Reuters

The remarks come a day after regional presidents James Bullard of St. Louis and Loretta Mester of Cleveland said they advocated for a half-point rate hike at the last meeting, rather than the quarter-point move eventually approved.

Data this week has indicated that after abating in recent months, inflation is moving up again.

"We were seeing some progress in lowering inflation at the end of last year, but some of the data that we're seeing early this year is not tracking with consistently lowering inflation in a way that I would like to see," Bowman said.

—Jeff Cox