Global Stocks Gain As Focus Turns To Shenzhen-Hong Kong Trading Link

Stocks in Asia closed mostly higher and those in Europe opened higher on Monday. The drivers of the gains include renewed hopes of the launch of Shenzhen-Hong Kong trading link. Hopes of more stimulus measures in China following tepid July economic data and expectations of a freeze in oil production as an OPEC meet next month also supported gains.

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It was announced last week by the China Securities Regulatory Commission that it had formed a special team alongside its counterpart in Hong Kong to work on the launch of a trading link called Shenzhen-Hong Kong Stock Connect.

A major announcement regarding the link is expected as soon as this week with possible formal launch of the link coming in December. Investors are closely watching the developments around Shenzhen-Hong Kong Stock Connect as its launch will make it easier for Shenzhen investors to buy Hong Kong stocks and vice versa.

But there is also another meaning to it as experts have pointed out:

“[Shenzhen-Hong Kong connect] has two positives: the first is it shows that this period of worry in Beijing about currency outflows has passed […]. But in a more practical way, it opens up increased access to the China market,” said Erwin Sanft of Macquarie.

How Asian stocks fared on Monday

Stocks in Japan were lower at close, with the Nikkei 225 (INDEXNIKKEI:NI225) felling 0.30%. The index was dragged by declining stocks in Warehousing, Insurance and Paper & Pulp sectors.

A strong yen also douse foreign appetite in Tokyo stocks. USDJPY fell 0.12% to 101.15 and EURJPY was down 0.04% to 112.94.

Taiwan stocks pulled back on Monday, with the Taiwan Weighted declining 0.02%. The index was led lower by falling stocks in the country’s Oil, Gas & Electricity and Optoelectronic sectors.

But stocks in South Korea gained as the KOSPI rose 0.08%. In China, the blue-chip Shanghai Composite rose 2.44% and the smaller HANG SENG INDEX (INDEXHANGSENG:HSI) in Hong Kong jumped 0.73%.

Australian Stocks

Shares in Australia closed higher Monday, with the gains supported by rising stocks in the country’s Telecoms Services, Consumer Discretionary and A-REITs sectors. With that, the S&P/ASX 200 rose 0.25%.

In Europe, the Euro Stoxx 50 could be seen rising more than 0.60% in morning trading, with Germany’s DAX and France’s CAC following suit.

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