Gloves come off Malaysian equities

Asian markets mixed, China higher

The first full trading day of the year has seen strong pan-Asia Manufacturing PMI’s and post-Covid optimism mostly lift markets across the region, with some notable exceptions. As the world’s centre for surgical glove manufacturing, that post-Covid future has seen glove manufacturers sold heavily today, pushing the KLCI down 1.70% today. Investors appear keen to lock in profits after a mighty rally in those stocks in Malaysia throughout 2020.

Japan’s Nikkei 225 has retreated by 0.60% this morning as the central government considers Tokyo’s state of emergency request to control their increasing cases of Covid-19. South Korea’s Kospi has leapt by 2.40% today after the central bank announced that employment would form part of its consideration for monetary policy settings from now on.

Mainland China’s Shanghai Composite has climbed 0.90%, with the CSI 300 climbing 1.20% after PMI’s today across China and Asia stayed, or rose further into, expansionary territory. The delisting in the US of three Chinese Telco’s, with the threat of more Chinese companies to follow, has had no perceptible effect on sentiment in China. Hong Kong has also risen strongly, coat-tailing the mainland 0.85% higher.

Taipei has risen 1.30%, with Singapore climbing just 0.20% after uninspiring GDP data this morning. Jakarta and Manila are 0.80% higher, with Bangkok retreating 0.70% on Covid-19 and lockdown fears. With no new Covid-19 cases reported in New South Wales today, and robust manufacturing PMI data from across Asia, Australian stocks have also risen. The ASX 200 and All Ordinaries are leaping 1.30% higher today.

Although equities are strong today and should remain so in Europe, where manufacturing PMI data should also show improvement and resilience, US equities will be facing the reality of the Georgia elections tomorrow. That is likely to take the wind out of Wall Street’s sails, and I would expect that gains in Asia will be harder to come by in the next few days until the result of the Senate runoff is clear.

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