(ATF) Hong Kong: Financial markets cheered the clear emergence of Democrat Joe Biden as the next President of the United States amid relief that the uncertainty hasn’t dragged on for weeks, despite some worries about Trump’s legal challenges.
The likelihood of a divided government and election gridlock – with the Republicans keeping control of the Senate – was seen as a positive by the market. A divided government would mean President Donald Trump’s pro-business policies would stay while Biden’s ascendancy would mean additional tariffs that triggered the trade war are less likely to happen.
“A split Congress appears likely, which will be seen as the best outcome for markets, as Mr Biden will not manage the tax or regulation he has previously talked about. Expectations are also that he will need to choose a centrist cabinet in order to get it approved by the Senate,” Esty Dwek, head of Global Market Strategy and Dynamic Solutions at Natixis IM, said.
The Asia Eight: Daily must-reads from world’s most dynamic region
She said that Biden has been welcomed by his European peers, who look forward to resetting relations with the US, as well as Mr Biden’s pledge to rejoin the Paris Climate Agreement on his first day in office.
Markets surge
Japan’s Nikkei 225 index soared 2.12%, Australia’s S&P ASX 200 advanced 1.75% and Hong Kong’s Hang Seng index rose 1.18%. Mainland China’s CSI300 surged 1.96% as data released over the weekend showed the world’s second largest economy was on a sustained recovery path.
“Exports continued to do well last month thanks to a shift in consumption, from services toward goods, in many of China’s trading partners,” Julian Evans-Pritchard, Senior China Economist at Capital Economics, said. He was referring to data released on Saturday that showed exports grew at the fastest pace in 19 months in October.
“Meanwhile, inbound shipments held up better than the decline in headline import growth suggests, consistent with continued strength in domestic demand.”
The MSCI Asia Pacific index adds 1.23% and the MSCI All-Country World Index surged to a record high.
The the dollar struggled, with the currency staying below the 93 level against a basket of currencies, while the yuan surged to a 28-month high as expectations grew the trade war would calm. The onshore spot yuan was trading at 6.5768 to a dollar after hitting its strongest since June 2018, earlier in the day.
“President-elect Biden’s China policy is likely to be more predictable and pragmatic. Consequently, US-listed China shares could benefit from fewer delisting threats. A Biden win should also be seen as a positive for the Chinese yuan, since he is less likely to use tariffs as a policy tool,” Mark Haefele, UBS Global Wealth Management Chief Investment Officer, said.
US Treasuries extended their losses with the 10-year yield climbing 3 basis points to 0.84%.
Also on Asia Times Financial:
As stocks deplete, Huawei plans its own in-house chips
TikTok peer Kuaishou files for Hong Kong IPO
Next-gen tech is speeding up financial sector change in Asia
Investors celebrate Biden victory
Debt-laden China Evergrande ends Shenzhen listing plan
Asia Stocks
· Japan’s Nikkei 225 index soars 2.12%
· Australia’s S&P ASX 200 advances 1.75%
· Hong Kong’s Hang Seng index rises 1.18%
· China’s CSI300 surges 1.96%
· The MSCI Asia Pacific index adds 1.23%.
Stock of the day
Sunny Optical Technology rose as much as 13.6% after it said that in October 2020, the shipment of handset lens sets grew 9.3% yearly to 159 million units.
