Market Close Oct 08

Investors hold out for stimulus, HK underperforms

Reports of fresh US sanctions hurt HK stocks; Gold boosted by weak dollar; US Treasuries rally after Fed minutes hint at bond buying

Investors hold out for stimulus, HK underperforms
Tony Fernandes, chief executive of Malaysian budget carrier AirAsia, says the group is looking to return planes to lessors and shrink its fleet to weather the impact of the coronavirus. He guessed the fleet would be cut from 245 to 180 planes by the end of 2021. This week it shut down its Japan operations and its long-haul arm AirAsia X to restructure $15 billion of debt. Photo: REUTERS/Lim Huey Teng.

(ATF) Hong Kong: Financial markets rose on Thursday as the fiscal stimulus debate gave investors hope but the possibility of a close US election next month triggering a policy deadlock capped gains.

While US President Donald Trump said in a tweet he was ready to support the Paycheck Protection Program and urged Congress to provide $25 billion bailout for US airlines, there are doubts these things will be easy to achieve.

“Following yesterday’s proposal of skinny, targeted fiscal stimulus by President Trump, BCA Research’s geopolitical strategists curtailed the odds of any significant stimulus deal ahead of the election to 20%,” the firm’s analyst Mathieu Savary said in a note.

“The announcement of his desire for small, piece-meal deals is more problematic because Speaker Pelosi is highly unlikely to agree to such programs.”

Japan’s Nikkei 225 index added 0.96%, Australia’s S&P ASX 200 climbed 1.09% but Hong Kong’s Hang Seng index dipped 0.20% as US threats of further sanctions brought down the tech heavyweights.

Mainland China markets reopen on Friday after a week-long holiday.

The United States is considering restrictions on China's Ant Group, as well as Tencent Holdings, over concerns their digital payment platforms threaten national security, Bloomberg News reported.  

The US Department of Commerce intends to prohibit Americans from doing transactions on the WeChat mobile app on national security grounds under a policy issued on September 18 that has been temporarily blocked by a US judge. 

Separately, the Committee on Foreign Investment in the US has inquired with groups which have invested in Tencent, including Epic, Riot and others, about their security policies in handling US users' personal data.

“We now think there is more than a 50% chance that Tencent’s US revenue is at risk, and therefore we've shaved off 2% and 4% of Tencent’s revenue and fair value estimate in our base case,” Lorraine Tan, Morningstar’s director of Equity Research in Asia, said. 

US Treasuries rallied after minutes of the Federal Open Market Committee’s Sept. 15-16 meeting hinted at increased bond-buying going forward. The 10-year yield fell 2 bps to 77%. The dollar weakened against a basket of currencies to below 94 and that boosted gold, which rose 0.3% to $1,892 per ounce.

Also on Asia Times Financial

Who killed the gasoline car? The future of electric cars 

Home prices falling in some China cities 

China reforms to open up foreign investment

Iran dumps dollar for yuan

Asia Stocks

· Japan’s Nikkei 225 index added 0.96%

· Australia’s S&P ASX 200 climbed 1.09% 

· Hong Kong’s Hang Seng index dipped 0.20%

· The MSCI Asia Pacific index advanced 0.64%.

Stock of the day

Shanghai Junshi Biosciences rose as much as 17.5% after it reported progress on its drug for the treatment of Covid-19. It said the drug’s treatment of symptomatic COVID-19 in the outpatient setting reduced viral load, symptoms and COVID-related hospitalization and emergency room visits.