Stocks in Asia traded lower in the early session, dragged by the Chinese mainland Shanghai Composite (-0.25%) and Hong Kong’s Hang Seng Index (-1%), but recovered to positive territory as the trading session progressed.
Earlier this morning, the People’s Bank of China (PBOC) cut its five-year loan prime rate (LPR) by 15 basis points to 4.30% from 4.45%, and lowered its one-year loan prime rate by 5 basis points to 3.65% from 3.70%.
Last week, the Chinese central bank cut two key interest rates in an effort to stimulate investment.
Investors are looking ahead to the U.S. Federal Reserve’s statement at Jackson Hole Symposium this week as the market is still on edge over Fed’s possibility of 75 basis points rate hike, though the probability was lowered in recent weeks after a decline in U.S. inflation data in July.
As of 10:55 BKK time on Monday, Nikkei fell 0.45%, Shanghai Composite rose 0.57%, Hang Seng Index increased 0.09%, ASX 200 slipped 0.78% and IDX Composite plunged 1.34%.
Despite a wild movement in the market, Finansia Syrus Securities (FSS) stated that the impact from Jackson Hole Symposium should be less as the big event this week in Thailand should help cushion the fall.
FSS stated that Thailand Focus and Jackson Hole Symposium will be held this week. According to historical data, the SET Index increased in the past five years when Thailand Focus took place. During the event, it surged by 0.8% on average (up three in five years), supported mainly by local institutions’ buying. It amounted to roughly Bt5bn on average, while foreign investors did not buy much. This year’s event will be held on August 24-26.
However, the SET soared in the past month, leaving a limited short-term upside. Hence, FSS expected lesser impacts than the previous years. In the U.S., investors should monitor the economic outlook from the Jackson Hole Symposium, particularly inflation and rate hike signals. The market currently gives a 60 and 40 weight for a 0.50% and 0.75% rate increase at the FOMC meeting in September.