Market Close Jan 13

Cautious optimism on vaccine rollout

Treasury calm after Fed officials comments; Infection spike in China sobers Chinese markets; Lenovo soars on STAR listing plans

Cautious optimism on vaccine rollout

(ATF) Hong Kong: Asian markets remained broadly upbeat but investors were watching the progress of the global vaccine roll out, even as the death toll across the world approached the 2 million mark.

“The 2021 outlook for emerging-market economies is relatively optimistic, based on a weaker US dollar and progress being made towards a COVID-19 vaccine,” said Invesco Chief Economist John Greenwood.

Gains were also capped as some analysts said the region will likely face lower demand for its exports in 2021 than in a typical export-led recovery, limiting the upside of the region’s economic upswing. 

“Economies like China and Japan should see strong domestic demand growth, but exports, their traditional area of strength, will be slower to recover,” said Greenwood.

Japan’s Nikkei 225 index added 1.04%, Australia’s S&P ASX 200 inched up 0.11% but Hong Kong’s Hang Seng index dipped 0.15% and mainland China’s CSI300 retreated 0.33% after China saw its biggest daily jump in COVID-19 cases in more than five months. 

Lenovo surge

But Lenovo soared as much as 17% on the HKEX after it said it will list on the Science and Technology Innovation Board of the Shanghai Stock Exchange. 

S&P Global Ratings said t was raising Lenovo’s revenue expectations and could lower its leverage projections to reflect surging PC sales and the mainland listing.

“Lenovo's proposed issuance of up to 10% of its share capital could raise about HK$9.7 billion based on the most recent market capitalization of about HK$97 billion. The proceeds would be used for research and development and replenishment of working capital,” said S&P analysts Clifford Kurz and Cher Chen.

 “In our upside scenario, we could raise the rating on Lenovo if it cuts leverage such that its adjusted debt-to-EBITDA ratio remains below 1.5x through business cycles while expanding its scale and profit margins.”

US Treasuries edged up with the 10-year yield down 1 bps to 1.12% after the pushback on taper talk. Federal Reserve Bank of St. Louis President James Bullard said getting through the pandemic  remains the policy priority. He also noted that the FOMC is waiting for further substantial progress toward their maximum employment and price stability goals. “The idea is that we want to get through the pandemic and sort of see where the dust settles, and then we’ll be able to think about where to go with balance sheet policy,” Bullard said.

The dollar firmed against a basket of currencies adding 0.2% to 90.23 and gold dipped 0.1% to $1,853. Oil was firm with the WTI 0.4% higher at $53.4 per barrel.

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index added 1.04%
  • Australia’s S&P ASX 200 inched up 0.11% 
  • Hong Kong’s Hang Seng index dipped 0.15%
  • China’s CSI300 retreated 0.33%
  • The MSCI Asia Pacific index advanced 0.50%

Stock of the day

Xinte Energy shares rose as much as 26% on the Hong Kong stock exchange after the renewable energy company said it will offer shares on the mainland stock exchange in an IPO which will raise funds that “will provide the Group with further options to satisfy its capital needs and expedite the Group’s entry into a new stage of development.”