Asia: Equities end November on a mixed note as probe into Chinese brokers continues

Asian stocks began the week on a mixed note, as the rebound in Chinese stocks was halted by the ongoing investigation into a number of brokerages.

The Shanghai Composite Index gained 0.26% after tumbling 5.5% on Friday, but it gained only 1.9% in November, despite being up over 20% from its August low earlier this month, while Hong Kong’s Hang Seng Index slid 0.3%.

On Sunday, Citi Securities, Haitong Securities and Guosen Securities, three of China’s largest brokers, revealed they were being investigated by the country’s regulator because of alleged violations of rules relating to signing margin-trade contracts with their customers.

The three firms were down 1.51%, 8.92% and 2.77% respectively on Monday.

Elsewhere, Australia’s S&P/ASX 200 and South Korea’s Kospi slid 0.69% and 1.82% respectively, while Japan’s Nikkei Stock Average was down 0.69%, registering a 3.5% monthly gain compared with a 9.8% advance in October.

On the macroeconomic front, According to the Ministry of Land, Infrastructure, Transport and Tourism, housing starts in Japan fell 2.5% year-on-year last month, marking their first decline in eight months and falling short of analysts’ expectations for a 2.6% gain.

In September, housing starts grew 2.6%, the slowest rate of growth since April. Meanwhile, the number of annualised housing starts declined to 8620,000 in October from 900,000 in the previous month, falling short of the 905,000 reading analyst had expected.

On the currencies front, the Chinese authorities fixed the onshore Chinese yuan at 6.3962 against the dollar, its weakest fixing against the greenback since late August. The decision by Beijing’s policymakers came after the International Monetary Fund announced plans to add the yuan to its elite basket of currencies that comprise its lending reserves.

“Given the heavy-handed government intervention in Chinese markets of late, from the currency devaluation to disallowing institutions from selling shares, there are fears the IMF maybe bending the rules to accommodate the world’s second largest economy into its Special Drawing Rights,” said CMC Markets’ analyst Jasper Lawler.

Meanwhile, the yen lost 0.15% against the dollar, while the Australian dollar surged 0.40% against its US counterpart.