Asia markets higher as China cuts reserve requirement; Hong Kong halts trading as typhoon approaches

Individuals stroll along a waterfront pathway adjacent to Victoria harbor in Hong Kong on August 31, 2023, one day prior to the impending Typhoon Saola. (Image courtesy of ISAAC LAWRENCE/AFP via Getty Images)

Isaac Lawrence | Agence France-Presse | Visuals by Getty Images

The markets in the Asia-Pacific region mostly experienced upward movements as the factory activity of China for the month of August grew, and the central bank decided to reduce reserve requirements in order to stimulate the economy.

Chinese shares increased after a positive private-sector study revealed stronger-than-expected factory activity growth in August. The CSI 300 gained 0.7%, the Shanghai Composite rose by 0.43%, and the Shenzhen Component increased by 0.44%.

The Caixin/S&P worldwide manufacturing purchasing managers' index increased to 51.0 in August, surpassing the anticipated 49.3 according to Reuters analysts' poll.

Furthermore, the People's Bank of China announced on Friday its intention to decrease the reserve requirement ratio for financial institutions regarding foreign exchange by 200 basis points. This adjustment is scheduled to come into effect on September 15th.

The stock market in Australia, specifically the S&P/ASX 200, experienced a decrease of 0.37%. This brought an end to its four-day period of gaining and resulted in a closing value of 7,278.3 on Friday. On the other hand, South Korea's Kospi saw a slight increase of 0.29%, concluding at 2,563.71. Meanwhile, the Kosdaq in South Korea suffered a decline of 0.93%, reaching a closing value of 919.74.

In Japan, the Nikkei 225 experienced a 0.28% increase and settled at 32,710.62, while the Topix saw a 0.76% rise and ended at 2,349.75.

Many of Hong Kong's financial markets, schools, and businesses shut down on Friday as the Asian financial center prepared for the severe Super Typhoon Saola. Hong Kong Exchanges & Clearing announced the cancellation of all trading sessions, including after-hours trading.

According to the Hong Kong Observatory, the Storm Signal No. 8 remains active as of 1:45 p.m. local time in Singapore/Hong Kong. They also mentioned the possibility of issuing a higher tropical cyclone warning signal between 6 p.m. and 10 p.m. Hong Kong time, depending on any alterations in the local winds.

Today, as Singapore prepares to cast their votes for the ninth president, the financial markets of the nation will remain closed.

During the night, the Dow Jones Industrial Average in the United States experienced a decline of approximately 168 points or 0.5%, ultimately reaching a closing point of 34,721.91. The S&P 500 also experienced a slight decrease, settling at 4,507.66 with a decline of almost 0.2%. Meanwhile, the Nasdaq Composite managed to tick higher as the market closed, although it still endured its worst month in 2023.

Samsung's Stock Surges 6% On Memory Chip Announcement

Samsung Electronics, a prominent electronics company in South Korea, experienced a surge in its stock value on Friday following its announcement regarding the successful creation of the world's initial 32-gigabit DDR5 DRAM chip with the implementation of 12 nanometer class process technology.

DRAM stands for dynamic random access memory, which is typically utilized by computer processors to access essential data or program code.

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Chinese Banks Lower Rates On Yuan Deposits

According to a report from Reuters, the Industrial and Commercial Bank of China, China Construction Bank Corp, and Agricultural Bank of China, among others, have reduced the interest rates on yuan deposits.

The announcement coincided with the People's Bank of China's decision to lower the reserve requirement ratio for financial institutions by 200 basis points starting from September 15th.

ICBC has reduced its interest rate for one-year yuan deposits by 10 basis points to 1.55% and for two-year yuan deposits by 20 basis points to 1.85%, effective immediately. Additionally, the interest rates for three- and five-year deposits have been lowered by 25 basis points.

According to Reuters, the Bank of China decreased its interest rates by the same magnitude as the Industrial and Commercial Bank of China (ICBC). Additionally, it was noted that the Agricultural Bank of China also implemented comparable rate reductions.

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Faster Contraction Of S. Korea's Factory Activity In August

Private surveys conducted by S&P Global reveal that the manufacturing sector in South Korea experienced a more significant decline in August.

The manufacturing purchasing managers index of the nation dropped to 48.9 from 49.4, indicating a continuous decline for the last 14 months, consistently remaining under the critical level of 50.

A PMI index above 50 indicates growth, while a reading below 50 indicates a decline in the industry.

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Japan Factory Activity Contracts For 3rd Month In July

Private surveys conducted by the au Jibun bank revealed that factory activity in Japan declined for the third consecutive month in August.

The manufacturing purchasing index of the nation was recorded at 49.6, a bit lower than the previously forecasted 49.7 and remained the same as the figure from July.

According to a report by the bank, decreased client trust and restrained economic circumstances allegedly impacted the initiation of new orders. Nonetheless, a few companies noted that the introduction of new products had mitigated the decrease to some extent.

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China's Bank Cuts Reserve Ratio By 200 Points

On Friday, the Chinese central bank, known as the People's Bank of China, made an announcement stating that it would lower the reserve requirement ratio for financial institutions dealing with foreign exchange. Effective from September 15th, the ratio would be reduced from 6% to 4%.

The decrease comes after several decreases in different interest rates over the past few weeks in an attempt to strengthen the economy.

According to Wind Information, on Friday, the People's Bank of China (PBOC) established the reference rate for the yuan against the US dollar at 7.1788, which was slightly higher than the rate of 7.1811 from the previous day.

According to Wind, the yuan traded offshore has experienced a decline and fell below 7.24 yuan in relation to the US dollar.

September Stock Slump: Pros' Trading Tips & Buys. CNBC Pro Insights

August has been a turbulent month. September, a month known for its stormy nature, might not bring much improvement.

Experts provide insights on how investors can participate in trading activities during the upcoming month and also recommend shares worth purchasing.

Readers who have a CNBC Pro subscription can access additional information on this topic by following the provided link.

Hong Kong Markets Halt As Super Typhoon Saola Looms

The commencement of trading in Hong Kong has been postponed due to the imminent arrival of Super Typhoon Saola, as stated by the Hong Kong Exchanges and Clearing Limited (HKEX).

HKEX stated that in the event that a Storm Signal No.8 or higher is still in effect at 9 a.m. Singapore/Hong Kong time, the morning trading sessions for all markets will be called off.

At 7.45 a.m., the Hong Kong Observatory observed that Saola is approaching Hong Kong and foresees that the "weather will worsen quickly later on." It is anticipated that the No. 8 warning will persist for the majority of the day.

As per the regulations set by the stock exchange in Hong Kong, if the No. 8 signal or a higher signal is issued before the pre-opening period, the trading activities will be suspended. This suspension will continue until 12 p.m.

— Lee Ying Shan

'Strong Strategy: Dividend Stocks Endorsed & 5 Top Picks'

Dividend stocks may not have everlasting potential, but allocating your investments in them for multiple years can yield fruitful rewards, as suggested by a professional overseeing portfolios.

According to Ben Kirby, who is additionally the co-head of investments at Thornburg Investment Management, the lackluster performance observed by them this year offers a chance for investment.

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Nasdaq's Worst Month Since Dec

August was a challenging period for technology shares, as the Nasdaq Composite and Nasdaq-100 experienced their most unfavorable performance since December 2022.

Over the course of the month, the Nasdaq Composite experienced a decline of approximately 2.2%, and the Nasdaq-100 concluded with a 1.6% decrease.

The software stocks Fortinet and Datadog experienced significant declines of 22.5% and 17.3% during the month. JD.com shares saw a loss of 19.6%, while both Lucid Group and PayPal saw decreases of over 17%.