Hong Kong: Financial markets remained subdued for another day as investors worried about a possible investigation into a $2 trillion scandal that could ensnare some of the biggest global banks. Concerns about the reintroduction of restrictions in some countries also hammered airline stocks as the coronavirus infection count crossed the 31-million mark globally with nearly a million dead.
Australia’s S&P/ASX200 index fell 0.66%, China’s CSI300 benchmark eased 1.19% and Hong Kong’s Hang Seng benchmark retreated 0.98% as HSBC and Cathay Pacific both fell by over 2%. Japanese markets were shut for a holiday.
Banking stocks remained under pressure from a report that more than $2 trillion in transactions for potential money laundering, sanctions violations and other criminal activity were done between 1999 and 2017.
HSBC fell as much as 3.4% and Standard Chartered dropped by over 4% as the sector continues to struggle to stay on the right side of regulators and the law.
Although the pandemic is making a comeback in many countries, forcing closures, analysts are sanguine there would be limited impact.
“Obviously, the markets care more about the economic impact of the pandemic in terms of new lockdowns, rather than the pandemic itself,” said Fawad Razaqzada, a market analyst at TF Global Markets.
“But governments have resisted introducing sweeping lockdown measures so far in this second wave of infections. This should have limited impact on the recovery, assuming the measures will get relaxed again as soon as the R comes down.”
Revised growth projections
And this is leading to upgrades in growth projections with a rebound factored in the third quarter.
“We expect a further recovery of the global economy to take place in Q3, before growth slows down in the last three months of the year,” Schroder Investment Management said in a note, which upgraded global growth forecast for 2020 to a decline of 4.6%, a better outcome than the previous forecast of a fall of 5.4%.
“The US economy turned in a better-than-expected performance for the second quarter of 2020 and that is the main factor behind our upgrade to the global forecast. We increased our forecasts for Japan and the emerging market countries too, while we reduced our forecasts for the eurozone and UK.”
And while risky assets had a down day, there was no scramble for safe havens reflecting this cautious economic optimism. US Treasuries were soft with the 10-year yield rising a basis point to 0.68% and gold prices down 0.4% at $1,905 per ounce.
Also on Asia Times Financial:
Foreign Exchange: Yuan caught in global stock markets’ downdraft
· Australia’s S&P ASX 200 eases 0.66%
· Hong Kong’s Hang Seng index retreated 0.98%
· China’s CSI300 slid 1.19%
· The MSCI Asia Pacific index edges down 0.2%.
Stock of the day
JD.com rose as much as 2.3% in a weak market after it said it will spin-off and list JD Health International, a consolidated subsidiary, on the Hong Kong Stock Exchange.
This report appeared initially on Asia Times Financial.