• York Investment & Finance

Global Markets Overview: Asia

Updated: Dec 4, 2020

By Aryaman Merchant, Analyst at the York IFS Global Market Telegraph

Nikkei 225 surges past 25,000 points after 29 years; US investors barred from investing in Chinese companies with ties to the military; Moderna & Pfizer develop > 90% effective vaccines; Asian markets mixed amid tug of war between hope and fear; Free-trade deal struck between APAC countries

The Asian markets have stayed relatively stable. As of Friday, the 20th of November, the BSE Sensex grew 0.65% when markets closed. The Hang Seng closed with a gain of 0.36%, the Shanghai Composite Index grew 0.44%, and Singapore’s Straits Times Index surged 1.30%. Only the Nikkei 225 fell by 0.42%.[1] The markets did not rally as much as their Western counterparts, with vaccine excitement stifled by fears of additional holiday-time lockdowns.

On Wednesday the 11th, the Japanese Nikkei 225 surged by 441 points to pass 25,000 points for the first time after 29 years, aided by a slowly recovering economy and the recent arrival of COVID-19 vaccines from Pfizer, BioNTech and Moderna. Electronics company Casio rose by 10.81% due to surpassing expectations for its July-September operating profit.[2]

Hong Kong’s Hang Seng Index fell a further 12.52 points on Wednesday the 18th despite new developments in the race against COVID-19 continuing its slow decline after breaking a 4-month high on the 11th of November.[3] For the first time in its history, colonial-era conglomerate Swire Pacific dropped out of Hang Seng Index, after netting a loss of $1bn and shares dropping 37% this year. It marks a change in the financial climate of Hong Kong, as an old British company was replaced by yet another Chinese tech company, Meituan Dianping.[4]

In an unexpected twist, Shanghai regulators suspended Ant Group’s leviathan $37bn IPO on the 3rd of November. The move wiped around $3bn of value from Jack Ma’s net worth, also leading to a 9.3% drop in value of Alibaba shares in Hong Kong (who owns 1/3rd of Ant Group); the world’s biggest IPO probably won’t occur for another 6 months.

Additionally, on the 13th of November, President Trump authorised an executive order banning Americans from investing in companies with ties to the Chinese military, furthering the trade war between US and China. The biggest hits will be on Chinese companies: Huawei, China Telecom and China Mobile, which claim their interests are legitimate and not influenced by the Chinese military. Paul Triolo of Eurasia Group expected Beijing “will be on guard for the Trump administration taking some hard parting shots towards China”, but will not make any knee-jerk reactions against the US in an effort to preserve relations for President-elect Joe Biden.[5]

On the 15th of November, select Asia-Pacific countries agreed to an unprecedented free-trade deal, which analysts estimate the deal could add about $200bn to the global economy by 2030 and 0.2% to the GDP of its members. The Regional Comprehensive Economic Partnership will further economic integration within the region and already comprises about 30% of the world’s population. Crucially, India dropped out of negotiations in late 2019, citing that the deal would do little to advance services which India dominates. These heightened concerns among the signatories that China would dominate the agreement.[6]

This article was first published in University of York Investment and Finance Society's Global Market Telegraph (GMT) Edition 12.1 in late November 2020.

Reference list: [1] https://on.mktw.net/2Uq6qLm [2] https://bit.ly/3pxOiO0 [3] https://bit.ly/2IFtumZ [4] https://on.ft.com/3kujg5T [5] https://cnn.it/3nnGuNc [6] https://on.ft.com/2Uwca6A

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