Asia Markets Advance But Covid Fears And China Crackdowns Limit Progress

• Alibaba, Tencent and ByteDance among 20 firms summoned to ministry summit

• President Joe Biden’s $1 trillion infrastructure bill inches towards approval

Asia’s markets enjoyed a mostly positive day on Monday but investor optimism continued to be kept in check by worries over the spread of the Delta coronavirus variant, as well as China’s regulatory crackdown.

Signs that US lawmakers were edging towards agreement on President Joe Biden’s $1 trillion infrastructure bill were unable to provide much of a boost, while eyes were also on the release of US jobs data at the end of the week as firms struggle to fill positions despite high unemployment.

In the latest sign of an upbeat global outlook, figures last week showed the US economy had returned to its pre-pandemic level – though at a slower pace than expected.

Also on AF: Beijing Market Regulator Fines Three Private Tutoring Firms, Says State Media

However, observers said the rally that world markets have enjoyed for much of the past year was sputtering as investors grow increasingly concerned about spiking inflation that many have warned could force central banks to taper their ultra-loose monetary policies.

Added to that are the slow Covid-19 vaccination programmes in some countries and the rapid spread of the Delta variant that has led to the reimposition of lockdowns and other containment measures.

Among those suffering a spike in cases is China, which had managed to bring the disease largely under control but some cities are now being forced to introduce new control measures.

Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei, Mumbai, Jakarta, and Manila rose but Singapore and Bangkok fell.

‘INFLATION SCARE’

The Hang Seng Index climbed 1.06%, or 274.77 points, to 26,235.80. The Shanghai Composite Index rose 1.97%, or 66.93 points, to 3,464.29, while the Shenzhen Composite Index on China’s second exchange jumped 2.15%, or 51.30 points, to 2,436.92.

Tokyo’s Nikkei 225 index rose 1.82%, or 497.43 points, to 27,781.02, while the broader Topix index advanced 2.05%, or 38.97 points, to 1,940.05.

“Shares remain at risk of a short-term correction or volatility as coronavirus cases rise globally, the inflation scare continues and as we come into seasonally weaker months,” said Shane Oliver at AMP Capital. “But surging company profits in the US and lower bond yields are providing support.”

Nervous traders are also keeping tabs on China after crackdowns on the country’s private tuition firms as well as the tech and property sectors.

ANTITRUST CONCERNS

The moves raised concern that other industries could be next, despite officials and state media trying to calm markets in the face of a rout.

On Friday, tech firms were told by authorities to conduct “deep self-examination” over issues including data security and user rights as they tighten the leash on big corporations citing national security and antitrust concerns.

Major names including Alibaba, Tencent, ByteDance, and Pinduoduo were among more than 20 firms summoned to the meeting with a department of the Ministry of Industry and Information Technology. Tencent fell 0.8% in Hong Kong, though Alibaba rose more than 1%.

Traders are also watching developments in Washington, where the Senate looks to be on course to pass Biden’s infrastructure bill, which will provide an extra jolt to the world’s top economy, adding to the president’s $1.9 trillion stimulus earlier in the year.

AFTERPAY SURGE

The bill includes huge spending on roads and bridges, the electric grid, transit, broadband and drinking water.

Biden is also aiming to pass an ambitious $3.5-trillion budget package that includes once-in-a-generation spending on health care, education, social welfare and climate action.

In Australia, Afterpay shares surged nearly 19% after US digital payments platform Square Inc., led by Twitter founder Jack Dorsey, said it would buy the Sydney-listed buy-now, pay-later company for US$29 billion.

MARKETS

Tokyo – Nikkei 225: UP 1.8% at 27,781.02 (close)

Hong Kong – Hang Seng Index: UP 1.1% at 26,235.80 (close)

Shanghai – Composite: UP 2.0 percent at 3,464.29 (close)

New York – Dow: DOWN 0.4 percent at 34,935.47 (close)