China stocks on a roll after stimulus measures, Asian FX rise

Chinese shares were poised for their best day in 16 years on Monday, driven by weekend stimulus measures that boosted risk appetite, while the Malaysian ringgit led gains among Asian currencies.

The Shanghai Stock Exchange advanced as much as 8.8 per cent to 3,358.58 points, with investors hopeful that the slew of measures would halt the extended economic downturn faced by world's second-biggest economy.

China's markets are closed from Tuesday for a week-long holiday.

The country's central bank said it would tell lenders to lower mortgage rates for existing home loans before Oct. 31, as part of sweeping policies to support the country's beleaguered property market.

The new stimulus measures offset disappointment from China's slowing manufacturing activity in September.

"A coordinated stimulus blitz suggests that China has reached a 'whatever it takes' moment with economic risks reaching Beijing’s pain threshold," analysts from Bank of Singapore wrote.

Among emerging Asian currencies, the ringgit rose as much as 0.6 per cent to trade at 4.099 per U.S. dollar, and was poised for its third straight monthly gain. China is the biggest trading partner for most of the region.

The Malaysian currency has had a stellar quarterly run, advancing around 12.9 per cent, making it the best performing currency of the year in emerging Asia, driven by a host of factors such as robust foreign investor inflows, economic growth and political stability.

The Thai baht, Taiwan dollar, and the South Korean won rose between 0.2 per cent and 0.5 per cent, with them posting monthly gains.

Investors will monitor inflation prints from South Korea, Indonesia and the Philippines during the week, while a key U.S. jobs report will likely determine if the Federal Reserve will deliver another outsized rate cut.  

Indonesia and Philippines had already kicked off their rate-cutting cycle, although others such as Malaysia, Singapore and Thailand are unlikely to ease policy through 2025, according to Barclays analysts.

"A relatively more positive growth outlook if China does enjoy a significant rebound could, at the margin, reduce the need for monetary policy easing for some central banks," Barclays analysts wrote.

"This would reinforce our view that EM Asia central banks are unlikely to 'follow' the Fed in cutting big or quick," they added.  

Among other Asian shares, Taipei stocks ended 2.6 per cent, down, with semiconductor giant TSMC losing 4.3 per cent.

In Tokyo, the Nikkei slumped 4.8 per cent, as investors awaited policy directions from incoming Prime Minister Shigeru Ishiba, who has been critical of the central bank's policies in the past.

Shares in Seoul, Manila and Jakarta fell between 1.2 per cent and 2.1 per cent