Market Close Dec 03

Investors upbeat as vaccine lifts 2021 outlook

China underperforms after US legislation targets Chinese listings; Yuan advances after strong China data; Gold emboldened by weaker dollar

Investors upbeat as vaccine lifts 2021 outlook
Photo: Reuters

Hong Kong: Asian markets were broadly higher on Thursday as the world’s biggest economy inched towards a stimulus plan but mainland China stocks underperformed after the US Congress approved a law that cast a pall over Chinese listings.

Although there is no deal yet in the US Congress after top Democratic congressional leaders embraced a $908 billion coronavirus relief framework, analysts are hoping that weaker data could persuade lawmakers to push through the package.

China's recovery remained on track but there were concerns that new US legislation could force Chinese companies to delist from US exchanges if an accounting regulator is not allowed to review their financial audits.

That forced Chinese stocks on the mainland to underperform with the CSI300 easing 0.2%. The pessimism was offset by data that showed activity in China's service sector increased at a substantial pace in November amid reports of greater customer demand.

The Caixin China General Services Business Activity Index came in at 57.8 in November, 1.0pp higher than October. 

“Sub-indexes suggest overall higher new businesses, strong improvement in employment, increased inflationary pressures and more optimism towards future output in the services sector,” said Goldman Sachs analysts in a note.

Vaccine optimism

But the rest of the region remained upbeat amid increasingly optimistic view for 2021 as positive news on the vaccine front triggered hopes of normalised economic activity.

Japan’s Nikkei 225 index inched up 0.03%, Australia’s S&P ASX 200 0.38% and   Hong Kong’s Hang Seng index added 0.74%. Regionally, the MSCI Asia Pacific index advanced 0.51%.

“After a pandemic like no other, and after incurring an extraordinarily large loss of lives and livelihoods, the world will strive to pick up the pieces and move on in 2021,” said DBS Bank in a note. 

“We think that Asia is primed for outperformance for three reasons: tailwind from a favourable trade cycle, strong FX buffers and savings, and a strong pull from an accelerating China.”

The yuan rallied as the US dollar fell to lows not seen since mid 2018. It rose to as high as 6.55 to a dollar while the US dollar fell 0.25% against a basket of currencies to 90.89.

The weakness of the dollar gave legs to the gold rally and the yellow metal added 0.6% to $1,841 per ounce.

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index inched up 0.03%
  • Australia’s S&P ASX 200 0.38% 
  • Hong Kong’s Hang Seng index added 0.74%
  • China’s CSI300 fell 0.2%
  • The MSCI Asia Pacific index advanced 0.51%.

Stock of the day

Link Real Estate Investment Trust rose as much as 6.2% after Morgan Stanley upgraded the stock to overweight from equalweight and raised the target price to $78 from $70. This implies a further 10% upside from the current levels.

economy asia markets