With the US closed for Thanksgiving and little to get excited about on the news front, the Asian session has had a muted start. Markets have ignored President Trump’s statement that he would concede once the US electoral college confirmed President-elect Biden’s win, reinforcing the impression that the US election has rapidly become yesterday’s news. Early trading in Asian stock markets has seen them edge lower, with India’s mass ban on more Chinese companies’ products continuing to weigh on mainland markets, which are nervous after a run of corporate defaults and increased oversight of the technology sector. The news the AstraZeneca intends to conduct more trials of its Covid-19 vaccine after criticism of its data may also be weighing on investor’s nerves, giving them the excuse to take more exposure of the table into the weekend. Early closes today on US bond and equity markets will likely ensue volatility remains modest.
Australia’s semi-olive leaf to China this week seems to have been swatted aside. China has announced it intends to start collecting anti-dumping deposits on Australian wine from tomorrow. There is no sign either that China will restart processing coal imports from the 50 ships worth of Australian coal anchored off the shores of China. Markets have, until now, completely ignored China’s silent trade war with Australia, which has seen basically every export sector except gas and iron ore penalised in some way or another. With a lack of other drivers today, that reality appears to be dawning on Australian equity markets. To a certain extent, this is Australia’s fault for allowing itself to become a one-trick pony export-wise to China.
China Industrial Profits was the highlight of an otherwise dull Asian calendar today. Industrial Profits surged 28.20% for October YoY and rose 0.70% on an annual basis from January to October. That was 6th straight month of increases, and the volatility of the YoY numbers aside, further confirms the strength of the China manufacturing recovery. Those gains may be harder to maintain as the US and Europe face an inevitable Covid-19 slowdown, and domestic consumption and credit woes remain concerns. But the overall picture confirms that China is doing better than most and will lead Asia’s recovery into 2021.
Malaysia’s government survived to fight another day overnight, with Parliament passing the second reading of the 2021 budget. A loss would have amounted to losing a vote of no confidence. The ringgit and Malaysian equities rallied on the news, but the government still faces a series of votes on individual parts of the budget in the weeks ahead. Nevertheless, political risk has reduced markedly and should allow Malaysia to outperform with the rest of ASEAN into the new year as the vaccine-led recovery gathers pace in H1.
