Market Close Dec 11

Vaccine setbacks and virus spike spook markets

Vaccine setbacks as Sanofi delays launch and Australian trial abandoned; Pelosi says the Trump administration is obstructing a second relief bill; Yuan seen making strong gains in 2021

Vaccine setback, virus spike spooks markets
Negative news linked to vaccines being developed in Europe and Australia hampered market sentiment in Asia on Friday, along with news that a further stimulus package had been held up in the United States. Photo: Reuters.

(ATF) Hong Kong: Asian markets were broadly lower after an impasse in the US stimulus package and following setbacks in two vaccine programmes that reminded investors that the road to normal economic conditions could be long and arduous.

Democrat House Speaker Nancy Pelosi said Republicans in the US Congress and the Trump Administration had caused a “deadly obstruction” that prevented a second relief bill being passed.

Meanwhile, while Germany said it had record virus cases and deaths, news on the vaccine front was closely watched. Drugmakers Sanofi and GSK  announced a delay in their adjuvanted recombinant protein-based Covid-19 vaccine programme due to a low immune response in older adults.

“We care greatly about public health, which is why we are disappointed by the delay announced today, but all our decisions are and will always be driven by science and data,” said Thomas Triomphe, executive vice-president and head of Sanofi Pasteur. He said product availability was now not expected until the fourth quarter of 2021, pending successful completion of the development plan.

And in Australia, the trial of a vaccine developed by the University of Queensland had to be abandoned after the vaccine was found to generate additional antibodies that tripped up some HIV tests, and caused false-positive results in those tests. (The vaccine's molecular clamp technology used fragments of a protein found in HIV to hold together a key part of the SARS-Cov-2 virus, so the immune system could learn to recognise it; but researchers said there had been no adverse health implications and no possibility that it would cause HIV infection).

The Australian government had agreed to purchase 51 million doses of the vaccine if it passed regulatory tests, but it will now buy an extra 20m doses of the vaccine developed by Oxford and AstraZeneca, it has said.

Japan’s Nikkei 225 index eased 0.39%, Australia’s S&P ASX 200 slipped 0.61% and China’s CSI300 retreated 1.03% but the Hang Seng index added 0.36% as funds switched their Wall Street listed holdings in Chinese companies to Hong Kong. Regionally, the MSCI Asia Pacific index advanced 0.27%.

The yuan weakened slightly to 6.55 to a dollar as US-China tensions prevailed amid the Trump administration’s threat to kick Chinese companies off Wall Street.

But the medium-term outlook for the Chinese currency is strong.

“We see a strong appreciation bias for the yuan in 2021. We expect the currency to gain around 4.5% in 2021, with USD/CNY ending 2021 at 6.30, last seen in early 2018,” Irene Cheung, ANZ's senior strategist for Asia, said.

“Over the longer term, it is also likely that the Chinese authorities will take advantage of yuan strength to make another push for capital account convertibility after limited success in the post-GFC years. Measures to liberalize capital outflows will slow the pace of yuan appreciation but will bode well for the long-term attractiveness of the currency,” Cheung said. 

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Asia Stocks

· Japan’s Nikkei 225 index eased 0.39%

· Australia’s S&P ASX 200 slipped 0.61% 

· Hong Kong’s Hang Seng index added 0.36%

· China’s CSI300 retreated 1.03%

· The MSCI Asia Pacific index advanced 0.27%.

Stock of the day

Sri Lanka bonds due in 2024 and 2029 fell by a point each after S&P Global downgraded its credit rating to CCC+ on increased financing risk.

Asian markets US stimulus 'obstructed' negative vaccine news Sanofi GSK University of Queensland Yuan Sri Lanka bonds