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MSCI to quadruple the contribution of mainland Chinese companies’ to its benchmarks

  
Analysis, Economy

Dow Jones / Wall Street Journal with the news on a huge boost for China shares

  • MSCI provides stock market indexes
  • The firm will increase the contribution of mainland Chinese companies’ to its benchmarks by a factor of four
Says the Journal:
  • a move that makes shares in Shanghai and Shenzhen all but unignorable for many international investors.
Sure does.
Link (WSJ is gated)
If you can’t access the WSJ, the FT has news also (oh, yeah, the FT is gated but a free registration can help access a certain number of articles each month):
  • MSCI included Chinese “A-shares” in the MSCI Emerging Markets index last year, but with a modest inclusion factor of 5 per cent of the float-adjusted market capitalisation that was added in two stages in May and August.
  • On Thursday, MSCI lifted the inclusion factor to 20 per cent, which will in practice triple the Chinese weighting in its EM index from 0.71 per cent to 2.82 per cent by August next year.

US Stocks tilt lower into the close. Rebound higher fizzles.

  
Analysis, US Market

Dow and S&P down for the 3rd straight day.  For the S&P it is the first 3 day losing streak in 2019.

The US stocks opened lower, moved lower, but recovered midday. The rally could not be sustained, however, and the major indices drifted into the close.

THe month is done though and the major indices ending with decent gains.
For the day, the final numbers are showing:
  • S&P index fell -7.89 points or -0.28% at 2784.49. The high reached 2793.73, while the low extended to 2782.51
  • The NASDAQ fell -21.978 points or -0.29% at 7532.53. The high reached 7561.89, while the low extended to 7516.48
  • The Dow fell -69.16 points or -0.27% to 25916.00. The high extended to 26029.21, while the low reached 25896.56
For the month, the final changes are showing:
  • S&P index rose 2.97%
  • NASDAQ index rose 3.44%
  • Dow industrial average rose 3.67%
For the YTD, the gains are even more impressive with the:
  • S&P index up 11.08%
  • Nasdaq up 13.52%
  • Dow industrial average up 11.10%
Canada’s S&P TSX composite index closed month up 3.04% and is up 11.7% in 2019 so far.

Nikkei 225 closes lower by 0.79% at 21,385.16

  
Analysis, Global Indices

Tokyo’s main index closes lower as Asian stocks fall in light of fading trade optimism and poor Chinese data

Nikkei 28-02
Japanese stocks performed poorly on the session as optimism from trade talks between US and China are put into question following comments by Lighthizer yesterday. Poor Chinese PMI data earlier in the day also isn’t helping with sentiment and as a result, markets are leaning towards a more softer risk tone as we gear towards European trading.
Of note, Chinese stocks are lower with the Shanghai Composite trading 0.5% down in the final hour of trading now. Some questionable rhetoric on the Trump-Kim summit is also something that could potentially meddle with risk sentiment later, so just be wary of that.

Japan Industrial production for January, preliminary:-3.7 % m/m (expected -2.5%)

  
Analysis, Economy

Trade tensions weighing on output in Japan

-3.7% m/m for a big miss – terrible data for Japan output
  • expected -2.5% m/m, prior -0.1%
0.0% y/y
  • expected 1.3% y/y, prior -1.9%
Outlooks for Japanese manufacturers from the METI:
  • see Feb output +5.0% m/m
  • see March output at -1.6% m/m
January IP falling its hardest since the same month in 2018
  • this is the third consecutive monthly decline
As noted in the preview (link below), there can be distortions in Jan and Feb data due to the Lunar New Year celebrations in China.
To the extent this impacts BOJ thinking it further distances the prospect of any exit from easy monetary policy. Thus a yen negative.

Nikkei reports Chinese companies are starting to curb hiring in 2019

  
Analysis, Economy

Japanese press reports on a small survey (30 firms present at job fairs in the neighbouring cities of Shanghai, Kunshan and Suzhou last week)

  • 10 plan to cut back or freeze hiring in 2019 from a year earlier
Bear in mind that is a very small sample, but the Nikkei does add:
  • Late February is normally the busiest season for job hunting and hiring in China

More:

  • a job fair at a Kunshan career center last Thursday was nearly half empty
  • Only 80 companies, mostly manufacturers, participated as many gave up on hiring or left booths unattended with only their names displayed.
  • Suffering from trade tensions, suppliers of liquid-crystal displays and smartphone components in particular plan to cut back on hiring. 
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