Asia Markets wrap
Asia Markets wrap

Hong Kong: Global financial markets paused as investors monitored the US-China tensions, following the proposed US travel bans on Chinese Communist Party members and China retaliating by calling it a “pathetic” plan.

In the latest slavo, China’s foreign ministry said on Friday that US officials had “lost their minds and gone mad” over their dealings with Beijing. Spokeswoman Hua Chunying said American officials were criticising China to distract from domestic political problems.

Meanwhile, progress is also being tracked as European leaders discuss a 750-billion euro post-pandemic recovery fund.

“Differences remain between some nations regarding the EU recovery fund; a fund which is planned to help those EU countries most affected by the coronavirus pandemic,” said Fiona Cincotta, a Market Analyst at data provider City Index, referring to the southern European countries needing the funds and Sweden, Denmark, Austria, and the Netherlands who want the fund to be smaller and more focused on loans rather than grants.

“Expectations are low that an agreement will be reached over the coming two days of the summit. However, the reality of failure to agree could still add downward pressure on the Euro and on sentiment for European stocks.”

Asian markets mixed

Earlier, Japan’s Nikkei 225 slipped 0.32%, but China’s CSI300 benchmark and Australia’s S&P ASX 200 recovered their morning losses ending 0.63% and 0.38% higher. Hong Kong’s Hang Seng index ended off morning highs, adding 0.47% to recover from the setback following the Hong Kong Autonomy Act signed by US President Trump earlier this week.

“The spectrum of possibilities is still very wide but extreme scenarios are probably to be ruled out in the short run,” Alicia Garcia Herrero, Natixis’ Chief Asia Pacific Economist said, referring to the US-China strategic competition and decoupling following the passage of the law.

“The immediate impact for Hong Kong should be limited but with growing uncertainties in the medium term.”

Broadly, investors and analysts are optimistic about risk assets. BCA Research analysts said investor nervousness would be short-lived and stocks will resume their uptrend as there is no political will to rescind fiscal stimulus.

“Investors should remain overweight global equities, while tilting their exposure to beaten-down cyclically-geared stocks and non-US markets. The equity bull market will only end when central banks get panicky about rising inflation, which is unlikely to happen for the next three years,” they said in a note.

In the week ahead flash PMI updates for the US, Europe and Japan will be watched for further recovery signs at the start of the third quarter. Also keenly eyed will be South Korea GDP updates, trade figures in Taiwan and Thailand, alongside employment data for Singapore, Hong Kong SAR, and Taiwan.

“Markets will continue to eye any risk of a widening second wave of infections worldwide as lockdown measures in a number of countries were reimposed,” Bernard Aw, Principal Economist at IHS Markit, said.

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China demand for iron ore recovering

Foreign Exchange: As US dollar hits more turbulence, yuan catches tailwind

Asia Stocks

# Japan’s Nikkei 225 slipped 0.32%

# Australia’s S&P ASX 200 added 0.38% 

# Hong Kong’s Hang Seng index rose 0.47%

# China’s CSI300 advanced 0.63%

# The MSCI Asia Pacific index edged down 0.15%.

Stock of the day 

Anta Sports rose as much as 6% after HSBC raised its target price for the sportswear company’s shares, while maintaining a buy rating. It raised its target price to HK$84.50 from HK$72.10 and said the company’s results suggest underlying demand is strong despite volatility and their inventory issue is well controlled. The target price suggests a further 16% upside. 

This report appeared first on Asia Times Financial.