China equities sink on geopolitics

US-China tensions weigh on China stocks

The US session was a mixed one, with a lack of stimulus progress eroding the S&P 500 and Dow Jones, which fell 0.12% and 0.21% respectively. The Nasdaq benefited from IPO fever and as legacy rotated into working from home, finishing 0.55% higher. Following DoorDash on Wednesday, it was AirBnB’s turn to shine with its IPO, its shares doubling on Thursday and finishing with a market cap of over USD100 billion. If nothing else, the IPO mania highlights how keen retail investors are to grab a slice of the 2021 vaccine-led recovery action at any price.

In Asia, new US restrictions on China telco companies have seen mainland markets retreat today, as the reality strikes that relations between the two superpowers are as bad as ever. The Shanghai Composite and CSI 300 have fallen 1.10%. However, Hong Kong has eked out a 0.30% gain.

Japan has fallen 0.55% inline with S&P 500 and Dow Jones, although the tech-heavy Korean Kospi has risen 0.80%, mirroring the Nasdaq. Australian markets have followed Wall Street lower, the All Ordinaries falling 0.40%, and the ASX 200 falling 0.60%.

Regional Asian markets have shrugged off the malaise though, with the vaccine recovery story playing out there as the week ends. Notably, financial sector stocks have led Kuala Lumpur to a 1.60% gain led by Malaysian Bank, and Singapore is higher by 0.50% led by DBS. Manila has jumped 1.90%, with Bangkok 0.40% higher, with Jakarta and Taipei flat for the day.

The mixed day in Asia appears to reflect a soup of position adjustment, geopolitics, Wall Street’s lead and a shift to recovery potential in previously underperforming regional markets. Next week, a dovish FOMC will continue to back-stop asset prices globally, and any negatives today are likely to be noise and dips to buy, not a structural turn in sentiment. Ultra-loose monetary policy is the one ring to rule them all.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley