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Asian shares rebound as bargain hunters sweep markets


Japan’s Nikkei rebounded 1.8%, while Chinese blue chips gained 1.2% from a three-week low

Asian shares and oil prices rebounded on Monday as bargain hunters swept beaten-down markets and China reported no new locally acquired COVID-19 cases for the first time since July.

A raft of “flash” manufacturing surveys for August out on Monday will offer an early indication on global growth in the face of the Delta variant of coronavirus, with analysts expecting some slippage especially in Asia.

Japan’s factory activity growth slowed in August, while growth in services sector shrank at the fastest pace since May last year, highlighting the impact of COVID-19 measures on the economy.

Following a strong V-shaped recovery, there are many signs of slower growth, says BofA’s chief investment strategist Michael Hartnett. The U.S. yield curve is at a one-year low, emerging markets are negative YTD and both copper and oil are down double digits from recent highs.

He expects negative returns for stocks and credit in the rest of this year and suggests investors own defensive quality.

In recent weeks, concerns over China’s economy have only intensified, while Beijing’s regulatory crackdown on the tech sector delivered a double blow to markets.

Over US$560 billion was wiped from Hong Kong and mainland China exchanges last week as funds fretted on which sectors regulators might target next.

Beijing is considering pressing data-rich companies to hand over management and supervision of their data to third-party firms if they want U.S. stock listings, sources told Reuters.

The impact has been evident in MSCI’s broadest index of Asia-Pacific shares outside Japan which tumbled 4.8% last week. The sheer speed and scale of the decline left it oversold, helping it rally 1.4% on Monday.

Japan’s Nikkei also rebounded 1.8%, but that follows a 3.4% slide last week to its lowest since December. Chinese blue chips gained 1.2% from a three-week low.

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