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Asian Stocks Up, but Traders “Glued to Their Seats” Over $20 Billion Trade

Published 03/28/2021, 11:21 PM
Updated 03/28/2021, 11:31 PM
© Reuters.

By Gina Lee – Asia Pacific stocks were mostly up Monday morning, but concerns remain about possible knock-on effects from a wave of block trades on Friday.

Japan’s Nikkei 225 gained 0.89% by 11:20 PM ET (3:20 AM GMT), with Nomura Holdings (NYSE:NMR) Inc.'s (T:8604) Japanese shares diving after the company warned of a possible “significant” loss arising from transactions with a U.S. client.

The Bank of Japan also released its summary of opinions from its March 2021 meeting, which said that the central bank could heighten transparency and stabilize markets by clarifying the band at which it allows long-term interest rates to move around its 0% target.

South Korea’s KOSPI edged up 0.11%.

In Australia, the ASX 200 was down 0.29%, with the country’s third-largest city of Brisbane will impose a snap three-day lockdown starting later in the day.

Hong Kong’s Hang Seng Index edged up 0.12%.

China’s Shanghai Composite was up 0.55% and the Shenzhen Component gained 0.65%. The country will release manufacturing and non-manufacturing purchasing managers index (PMI) figures later in the week. The Caixin private sector manufacturing PMI is also due within the week ahead, with the Caixin services PMI due the week after.

U.S. equity futures fell after it was revealed that Archegos Capital Management LLC, former Tiger Management trader Bill Hwang's family office, was behind the block trades totaling $20 billion. The trades started dumping Chinese tech and U.S. media conglomerate shares, including those of ViacomCBS Inc (NASDAQ:VIAC) and Discovery Inc Class A (NASDAQ:DISCA), amid margin calls ahead of the weekend. Morgan Stanley (NYSE:MS) reportedly offered the latest batch of ViacomCBS shares on Sunday.

Shares in the two companies could actually recover on Monday, with the market’s fundamentals remaining intact as “the correction was not structural,” Safehouse Global Consumer Fund portfolio manager Sharif Farha told Bloomberg.

Farha expected benign price action as Asian markets opened but added that anticipation for Monday’s U.S. open remains high.

“Traders everywhere know the story and will be glued to their screens,” he added.

Other investors also seemed unworried.

“I don’t necessarily see that we’re going to have a big correction even with these block trades going on in the market... there is not a lot of bad news lurking that’s going to truly cause a major correction at least the next two to three months, therefore your dips are going to be modest,” Pepper International chief executive officer and founder Carol Pepper told Bloomberg.

Also boosting investor sentiment were signs of a quickening in both the U.S. economic recovery from COVI9-19 and the pace of its vaccine rollout. U.S. President Joe Biden is also expected to provide further details about another stimulus package, this time tilted towards infrastructure, on Wednesday.

The U.S. employment report for March, including non-farm payrolls, is due on Friday.

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