Key Asian stock markets outside of China and Japan will kick off today’s session coming off another strong day of gains on Monday.
India’s two main indexes – the Nifty 50 and BSE Sensex — both hit record highs in intra-day trade on Monday before falling slightly by the close.
The Nifty 50 finished up another 0.3%, after posting it’s best weekly gain last week since March this year.
The news in emerging Asian market wasn’t as good on mainland China, despite stable GDP growth of 6.9% in the June quarter which met market forecasts.
The benchmark Shanghai composite index fell by 1.4%, and within that headline figure the Chinext small-cap index crashed by more than 5%.
Markets were rattled following a weekend meeting in which President Xi Jinping oversaw the setup of a new committee which will focus on credit risk and financial stability in the Chinese economy.
That sparked heavy selling in smaller and mid-tier Chinese companies which don’t operate with financial guarantees from the state.
Credit risk in China didn’t extend to Hong Kong markets though, where the Hang Seng index rose by another 0.3% and is trading around 2-year highs. South Korea’s KOSPI Index rose by 0.43% to close at a new all-time high of 2,425.10.
Last week’s underwhelming data figures out of the US, combined with a cautious outlook from the US Federal Reserve have provided a favourable backdrop for emerging markets in Asia.
The consistent run of soft data prints is weighing on the US dollar, while the US Fed’s communications to the market suggest that any reversal of easy monetary policy is likely to be slow and steady.
The continued flow of liquidity assists the flow of capital into emerging markets. Foreign investment into Asia for the first half of 2017 hit its highest level in five years.
Within emerging Asian markets, the focus has been on traditional heavyweight stocks such as Tencent Holdings in Hong Kong and Infosys Ltd in India.