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Asia-Pacific investors stay put awaiting Fed meet conclusion

By Mensholong Lepcha

04:48, 15 December 2021

Stock Market Exchange on a skyscraper in Hong Kong background.
Stock Market Exchange on a skyscraper in Hong Kong background – Photo: Shutterstock

Asia-Pacific markets were mixed on Wednesday with investors holding back from making bets as they awaited clarity on the US Federal Reserve’s (Fed) tapering policy to be announced later in the day.

Markets in Japan and Australia posted minor movements in opposite directions, up 0.1% and down 0.6% respectively, by afternoon trade on Wednesday.

“Yesterday, risk-off momentum in overseas markets was seemingly caused more by concerns about the FOMC than the Omicron variant, and more by concerns over quantitative tightening (QT) than anxiety over rate hikes…,” said Naka Matsuzawa, research analyst of Nomura, in a note.

Quantitative tightening linked to excess liquidity

“QT is more directly linked to excess liquidity than yield levels, and thus to the shaping of asset prices. We think it is unlikely that the Fed would decide to go ahead with QT at this meeting, but simply becoming a topic of discussion will hurt risk assets more than bonds,” Matsuzawa added.

Meanwhile, analyst at ANZ Research differed in their view by expecting a tapering announcement from the Fed.

“A steelier tone, a higher dot plot and a doubling of the pace of tapering from USD15bn to USD30bn are widely expected,” said ANZ Research.

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Property gains lifts Hong Kong market

In Hong Kong, benchmark Hang Seng Index rose 0.2% to 23,684 by lunch time on Wednesday. The index was on track to snap three straight days of losses.

US500

4,604.60 Price
+0.500% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.7

US30

36,246.10 Price
+0.420% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 2.2

US100

16,080.90 Price
+0.500% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 7.0

HK50

16,280.60 Price
-0.900% 1D Chg, %
Long position overnight fee -0.0259%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 30.0

China’s central bank on Wednesday injected a further CNY500bn into the nation’s financial system via medium-term loans, following up on banking reserve requirement ratio (RRR) cut from last week. The Chinese central bank, in contrast to its global peers, has been easing monetary policy gradually to support its cash-strapped property sector with liquidity.

On Wednesday, the Hang Seng Mainland Properties Index rose 1.3% by midday. Real estate firms China Resources Land and Country Garden Services Holdings were among the top three gainers on the benchmark, up over 2.5% each by lunch break.

Gold stocks slump in Australia

In Tokyo, stocks in Toyota Motor jumped over 3.3% to JPY2113 after the automaker laid out its electric vehicle strategies.

Elsewhere, the technology sector was the top loser in Australia on Wednesday with the likes of buy now, pay later firm Afterpay down 3.7% and logistics software provider WiseTech Global down about 1%.

Australian gold stocks slumped on the S&P/ASX All Ordinaries Gold Index falling about 3% by Wednesday afternoon. Bullion prices witnessed a sharp drop on Tuesday ahead of expected tapering announcement from the Fed.

Read more: US potential rate hikes to put a lid on gold price in 2022

Markets in this article

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Australia 200
7212.0 USD
55 +0.770%
AU200
Australia 200
7212.0 USD
55 +0.770%
AU200
Australia 200
7212.0 USD
55 +0.770%
AU200
Australia 200
7212.0 USD
55 +0.770%
AU200
Australia 200
7212.0 USD
55 +0.770%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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