Asia Markets wrap

Hong Kong: Investors are tiptoeing back into the market amid optimism about the discovery of a successful vaccine to treat the coronavirus but analysts are unsure if this rebound will last.

“We were probably due a vaccine story about now. After all, stocks had been weak for a day or two,” said Robert Carnell, ING Bank’s regional head of research in the Asia-Pacific, but he warned that along with news of progress there were some cases of adverse reactions too.

“So from a safety trial, I’m not so sure this was the glaring ‘buy’ signal markets seemed to read into it.”

A host of global pharmaceutical companies are in the race to launch a successful vaccine and drugmaker Moderna announced its vaccine led patients to produce antibodies that can neutralise the novel coronavirus although it caused minor side-effects in many patients.

Moderna is considered to be in a leading position in the race to find a vaccine against the coronavirus, which has infected more than 13.2 million people and killed 570,000.

Japan’s Nikkei 225 has jumped 1.44%, Australia’s S&P ASX 200 has climbed 1.2% but Chinese equities are subdued as US President Donald Trump said he is “not interested in talking to China” on “Phase 2” trade negotiations.

US-China tensions remain elevated as Beijing said it will impose retaliatory sanctions on US individuals and entities after Washington’s move.

UK axes Huawei

In a related development, the UK ordered a complete removal of Huawei equipment from Britain’s 5G network by 2027, a move that is bound to draw a reaction from China.

China’s CSI300 benchmark is down 0.45%.

Later today, Bank of Japan is widely expected to retain its main policy settings as markets monitor the central bank’s quarterly economic projections for the world’s third largest economy.

“The 2Q GDP contraction in Japan may have exceeded -20% quarter-on-quarter seasonally adjusted annual rate, as evidenced by the sharp declines in industrial production, retail sales and exports,” DBS economists said in a note. They expected no new easing measures to be announced.

“The BOJ has already taken aggressive measures so far this year … The authorities will likely focus on implementing the existing stimulus for the time being,” they said.

The credit market continues to be driven by yield seeking flows with the Asia IG index moving in by 2 basis points to 78/79 and sovereign CDS 1-2 bps tighter.

South Korea’s GS Caltex has announced a mandate for medium to long dated dollar bonds and is currently holding investor meetings.

Chinese developer Greenland Holdings has set initial price guidance for a two-tranche bond offering likely to price today and Bright Foods has issued guidance for a euro-denominated bond also to price today. 

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This report appeared initially on Asia Times Financial.

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