Asia Markets wrap

Hong Kong: Asian markets were on edge after a second pharmaceutical company paused a clinical trial of its Covid-19 antibody treatment because of safety issues and the fading prospect of a second US stimulus package before the elections.

Eli Lilly joined Johnson & Johnson in pausing a Covid-19 vaccine trial, triggering concerns about the resurgence of the pandemic, which has infected over 38 million people worldwide and claimed over a million lives.

The yuan firmed after Chinese President Xi Jinping’s speech unveiled further economic ambitions for the once-sleepy town of Shenzhen, which has transformed over the past four decades into a technology powerhouse. The speech on the occasion marking the 40th anniversary of the establishment of the southern special economic zone reiterated support for the region and to connect Hong Kong and Macau to mainland cities of Guangzhou, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing. 

Shenzhen and the Greater Pearl River Delta including Hong Kong and Macau will develop into China’s and East Asia’s “technology and industrial high ground,” Xi announced.

China will achieve technological independence, he said, not by closing itself off to the world, but by inviting the greatest degree of foreign participation.

The yuan firmed marginally to 6.7251 per dollar but is still weaker than the levels it was trading at on Friday. Over the weekend the PBoC abolished the need for banks to hold a reserve of yuan forward contracts leading to a slide in the currency. The currency had rallied from 6.84 to the US dollar on September 25 to 6.68 on October 12.

Japan’s Nikkei 225 index inched up 0.11%, Australia’s S&P ASX 200 dipped 0.27% and Hong Kong’s Hang Seng index edged up 0.07%. 

But China’s CSI300 slipped 0.66% amid worries the property sector will be under pressure to meet the “three red lines” policy – metrics regarding debt that developers will have to meet if they want to borrow more.

Agnes Wong, BNP Paribas’ Head of Asia Credit Strategy, expects “issuers to meet these requirements by cutting land budget, terming out maturities and employing more MIs and JVs on their balance sheet. Evergrande and Guangzhou R&F Properties, may however require extra measures like asset disposals or equity financing given their off the chart gearing.”

The US dollar fell 0.2% against a basket of currencies to 93.4, and gold rose 0.7% to $1,906 per ounce.

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Asia Stocks

· Japan’s Nikkei 225 index inched up 0.11%

· Australia’s S&P ASX 200 dipped 0.27% 

· Hong Kong’s Hang Seng index edged up 0.07%

· China’s CSI300 slipped 0.66%

· The MSCI Asia Pacific index %.

Stock of the day

Evergrande shares fell after it announced it is selling shares equal to 2% of its equity at a discount of 16.7% of its share price in a HK$4.3 billion raising. Its shares fell as much as 14.7%.

This report appeared initially on Asia Times Financial.

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