Once again, Shanghai stock markets provided for some entertainment in the overnight, declining as much as 7.5 percent in morning trade. However, when it was all said and done, the benchmark index finished 3.5 percent higher as speculation surrounded the notion that the government will likely intervene to minimize any speculative declines in domestic stocks. The decision likely comes on the heels of notable routs in the past three months, with the government expected to propose the establishment of a government run agency, otherwise known as a stabilization fund. In addition, expectations were also heightened on a dismissal of a capital gains tax in order to give markets a more stabilized outlook. All in all, the CSI 300 Index was able to bounce back, adding 123.20 points to 3,634.63 at the close. Comparatively, markets in Hong Kong and Singapore were mixed on the volatile session. Singapore’s Straits Times Index dropped from a record close, dipping by only 6.45 points to 3,572.90, with bellwether stocks like Sing Telecommuniations leading shares in the red. Hong Kong stocks, on the other hand, were boosted by Chinese share gains and vaulted higher by 112.56 points to close at 20,842.15 on the Hang Seng. Notably, crude oil providers helped to boost the overall index after crude oil prices traded toward a two week high.



Manufacturing Rebounds In Singapore

After contracting in the month of April, Singapore manufacturing climbed in May according to the Singapore Institute of Purchasing and Materials Management. Rising 0.3 point to 50 in the month, the sector advanced back to expansionary territory as factory output rebounded in the month following factory closings that usually keep output sporadically thin. The electronics subcomponent remained unchanged at 51.1 and keeps support for the Sing dollar at bay for the moment, as the report shows potential weakness in the coming months.

Citic Securities To Raise $2.5 Billion In Share Sale

China’s biggest publicly traded brokerage, Citic Securities, announced plans to sell shares that are worth $2.5 billion, equivalent to 350 million new shares in Shanghai. Subsequently, the company also plans to pay as much as 400 million yuan for another 35.7 percent of China Asset Management Co. The unit created the country’s first exchange traded funds, and is now 60.73 percent owned by Citic according to the company’s most recent annual report. Both moves seem to be a simple reflection of the current equity conditions as investors continue to seek higher rates of return in the world’s fastest growing economy. With the growing reach, Citic Securities would be able to capitalize on the flood of capital still seeking to get into the market. The news bolstered share prices of Citic, kicking the stock’s pirce higher by 4.4 percent to 58.48 yuan, reversing the 6.4 percent earlier plunge.

Hong Kong Exchange Plans Move To Offer Commodities

In line with the recent spate of interest in the commodities realm, officials from the Hong Kong Exchanges & Clearing Ltd. are expecting to choose advisers as soon as June in order to potentially establish such an exchange. Although speculation had been surrounding the plausibility of such a plan, confirmation came as the company’s Chariman Ronald Arculli announced plans to create a commodities derivatives exchange. The decision comes as no surprise as the firm pushes for the competitive edge against rivals in Singapore and Tokyo. Currently, Singapore is the region’s biggest oil trading center with Tokyo housing the region’s largest futures market for precious metals. Incidentally, Chaiman Arculli is also attempting to keep rampant profitability steady in the company after boosting profits as high as 93 percent in the first quarter. Supported by a massive leap in trading, the companies profits surged to a record HK$922.5 million in the first three.

Richard Lee is a Currency Strategist at FXCM.