Market Close Mar 26

Vaccine rollouts keep bulls charged

Global immunisation shots boost sentiment; oil gains capped by hopes Suez blockage will be cleared; China outperforms on dovish credit signals

Vaccine rollouts keep bulls charged
Calling the market. Photo: Reuters

(ATF) Hong Kong: Asian markets rose on investor confidence that vaccine rollouts worldwide will expedite the reopening of the global economy.

Chinese stocks outperformed after the latest State Council meeting extended a loan concession scheme for small- and micro-businesses that was introduced a year ago when the coronavirus was at its height in China.

Japan’s Nikkei 225 index jumped 1.56%, Australia’s S&P ASX 200 added 0.49%, Hong Kong’s Hang Seng index advanced 1.57% and China’s CSI300 jumped 2.27%, outperforming the region amid dovish credit signals. Regionally, the MSCI Asia Pacific index rose 1.08%.

“The Chinese government’s decision to extend the moratorium on inclusive loans and related funding support to the end of 2021 is credit positive for Chinese banks,” said Yan Li, AVP-Analyst, Financial Institutions Group at Moody's Investors Service. “The extension will mitigate potential loan delinquencies from sectors highly impacted by the pandemic, and lower banks’ funding costs by extending interest subsidies on 40% of inclusive loan principals."

Cautious Beijing

Analysts said these messages suggest Beijing is still cautious about the growth recovery, recognises the increasing divergences in growth among provinces and worsening interregional inequality, and plans to deliver stable and balanced credit growth that favours SMEs and relatively poor regions.

Regionally there was optimism playing out on the back of the vaccine rollout.

“Vaccination rates are picking up pace in some economies,” said HSBC economists in a note. “Eligibility requirements are also being expanded further – China and India have raised their vaccination rates the most in Asia over the past week.”

Analysts expect that after the easing of restrictions, and following the eventual lifting of partial lockdowns, there would be a sharp rebound in sentiment and consumer activity as vaccines are rolled out and the pandemic is under control.

Safe havens were shunned after the boost to risk appetite with a selloff in US Treasuries pushing 10-year yields 4 bps higher to 1.67%. Gold lost some of its shine, easing 0.4% to $1,727 per ounce.

Oil rose in anticipation of demand and as hopes rose that the protracted delay in removing the blockage in the Suez Canal would end soon, and that alternative shipping routes would be used.

“As long as the blockage is resolved soon, there will not be any lasting effects on the world economy,” said Gabriella Dickens, Global Economist at Capital Economics. “After all, ships can divert around Africa in the meantime, and the stoppage will presumably be made up for by heavier traffic once the block is removed.”

West Texas Intermediate crude gained 2.6% to $60.07 a barrel and Brent crude increased 2.4% to $63.43 a barrel.

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index jumped 1.56%
  • Australia’s S&P ASX 200 added 0.49% 
  • Hong Kong’s Hang Seng index advanced 1.57%
  • China’s CSI300 jumped 2.27%
  • The MSCI Asia Pacific index rose 1.08%.

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