On Monday, Chinese stocks rallied for the 5th straight day to new 7 year highs, while the strong U.S. dollar (USD) assisted in gaining ground for shares in Japan, extending its 15-year high.
SSE Composite (SHCOMP, +1.46%), Shanghai’s benchmark, continued with its recent increase, rising 3.4 percent on Monday to 4,813.798. A host of infrastructure projects that are funded by the government in a bid to stabilize growth have assisted to fuel recent buying interests in stock. The same Shanghai shares increased 8.1% last week.
Also, the Ministry of Finance in China on Monday said that it would decrease import duties on shoes, clothes and cosmetics by 50% on average, to form part of a plan to increase domestic consumption and also to sustain economic growth.
With the pending China-Hong Kong mutual fund recognition program launch as well as the anticipation of the Shenzhen-Hong Kong stock connects arrival, these keep adding investor confidence, according to Guosen Securities analyst, Fang Yan. He also added that the tremendous stock demand is not met with enough supply of new stocks.
Meanwhile, stocks were on route for their eleventh increase in the last twelve sessions in Japan to reach a new fifteen-year high, assisted by the greenback’s strength. The Nikkei Stock Average (NIK, +0.13%) increased 0.7% to close at 20,413.77.
As the market closed on Monday, the USD traded at ¥121.59, above the levels seen on Friday, and has now increased almost 2.0% against the yen since April 30.
The chief executive officer for Phalanx Capital Management in Chicago, Chris McGuire, said that stocks in China are reaching full valuation levels, while shares in Japan continue to see bids that are value based from offshore.
Some of the top performers of the day included Daikin Industries (TYO: 6367), an air conditioner maker which increased 2.1%, Toyota Motors (TYO: 7203) which rose 1.4% while TDK (TYO: 6762) gained 1.6%
In other parts of the region, New Zealand’s NZX50 (NZ50GR) rose 0.3% to 5,794.981 and Australia’s S&P/ASX200 (XJO) increase 1% to 5,721.50.
MT4 Chart: Nikkei
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