Why Asian Markets Rebounded on August 14

After gaining for seven consecutive trading weeks, China’s Shanghai Composite Index fell last week. Despite weak economic data, the Shanghai Composite rebounded on Monday and started this week on a stronger note.

Chinese markets rebounded on Monday as concerns over the geopolitical tensions between North Korea and the United States fell. The Shanghai Composite opened higher and gained on Monday despite weaker-than-expected fixed asset investment and industrial production data. According to the data released by China’s National Bureau of Statistics, industrial production rose 6.4% in July, the slowest pace since January 2017. The market was expecting 7.2% growth. On the other hand, China’s fixed asset investments rose 8.3% in July, less than the market’s forecasted growth of 8.6%.

On August 14, the Shanghai Composite Index surged 0.9% and ended at 3,237.4. The market is looking forward to the release of China’s new loans data, tentatively scheduled for August 15.

After falling for two consecutive trading days and pulling back from two-year high price levels, the Hong Kong’s Hang Seng Index regained strength on Monday. Despite weak economic data from China, the Hang Seng Index surged higher and reclaimed the 27,000 level on August 14. The risk appetite in the market increased as North Korea tensions settled down. On August 14, the Hang Seng Index closed the day at 27,250.2 with a gain of 1.4%. The iShares MSCI Hong Kong (EWH) fell 0.12% to $24.14 on August 11.

After declining for four consecutive trading weeks, the Japan’s Nikkei Index started this week on a weaker note. Despite the global rebound of stocks and supporting economic data, the Nikkei was subdued on Monday. According to data released by the Cabinet Office, Japan’s GDP expanded at a rate of 4% YoY in the second quarter of 2017. The market is looking forward to the release of industrial production data on August 15. The Nikkei Index closed the day at 19,537.1, a drop of 0.98%. In the next part, we’ll see how the European markets performed in the morning session on August 14, 2017.