Asian stocks up despite lower yuan

Anxiety gave way to relief on global markets as China’s central bank eased concern that a shock currency devaluation would trigger broader financial turmoil.

Among the key Asian bourses, China’s Shanghai Composite Index closed 1.8 per cent higher, Hong Kong’s Hang Seng Index rose 0.4 per cent, while Japan’s Nikkei-225 average and Singapore’s Straits Times Index both climbed 1 per cent, as the region’s shares rebounded from seven-month lows.

The offshore-traded yuan rose 0.2% to 6.4546 per dollar, leaving its drop in the week at 3.8%, still the most since at least 2010, according to data compiled by Bloomberg.

Banks in Hong Kong have launched a slew of structured yuan deposit products with attractive returns to compete for new funds after Beijing scrapped a 20,000 yuan (US$3,110) daily conversion limit for local residents in last November.

Shares in Lenovo Group Ltd slumped for the second day, after the Chinese personal computer giant said its quarterly net profit was halved as its mobile division lost almost $300 million.

Seoul s financial markets were closed for a public holiday.

KEEPING SCORE: The Chinese yuan’s market rate fell 1.8 percent after Tuesday’s nearly 2 percent decline, which was the biggest drop in a decade.

In Hong Kong, the Hang Seng was up by 0.6% to 24,048.49 points.

“There seems to be high expectations for some of the measures introduced by the authorities to support domestic consumption”, said Gerry Alfonso, a Shanghai-based director with Shenwan Hongyuan Securities. Critics call this a brazen attempt on China’s part to make its products artificially cheap on world markets while making imported goods unduly expensive in China.

China’s abrupt devaluation of its yuan made for a tough week for a lot of markets – currencies, commodities and stocks – worldwide.

The China stock market on Thursday snapped the two-day slide in which it had retreated more than 40 points or 1.1 percent.

In Tokyo, the greenback changed hands at ¥124.26, down from ¥124.43 in US trading, while the euro traded sideways at US$1.1151 from US$1.1152.

Spark New Zealand closed down 2.56 percent at NZ$2.66 and Meridian Energy lost 2.04 percent at NZ$2.16. The underlying index slipped 0.1 per cent on Thursday.

Miner Vedanta Limited rose 3.73 per cent to 107.20 rupees, while drug maker Dr Reddy’s Laboratories fell 0.75 per cent to 4,258.05 rupees.