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Asian Markets Down as Investors Look to An Uncertain 2022

Stocks fell in most Asian centres on Wednesday as a “Santa Claus rally” showed signs of fatigue and continued fears over the Omicron variant – and uncertain prospects for 2022


Some of China's state banks and asset managers are refusing to rescue distressed property companies because of the debts they will incur, sources say.
China's top banks are tightening scrutiny of smaller lenders amid concern about the quality of some banks' assets. Reuters file photo.

 

Asian stocks were mostly down in Wednesday trade as a “Santa Claus rally” showed signs of fatigue and continued fears over the Omicron variant – as well as uncertainty about economic prospects for 2022 – weighed on markets.

Covid-19 cases have surged across the world, prompting governments to impose new measures to limit contagion while the travel industry faced thousands of flight cancellations.

Warnings from the World Health Organization that the risk from the variant remains “very high” have compounded the sense that the pandemic is far from over, though data showing a reduced risk of hospitalisation has lifted spirits.

Reflecting the uncertainty, Tokyo closed down in thin holiday trade on Wednesday, with the market weighed down by US futures losses.

Seoul was also down, while Sydney and Wellington rose. Europe opened mixed, with London’s FTSE slightly up while Paris and Frankfurt fell.

 

China Markets Down

In China, markets fell, in a slide analysts partly attributed to losses in shares of major liquor brands – including Kweichow Moutai, one of the world’s biggest drinks companies.

“The drop is mostly contributed by some blue chips, in particular the baijiu names,” Zhang Gang, a strategist at Central China Securities, said.

“It’s likely that some funds want to cash out before the year-end after the recent rebound.”

Hong Kong’s Hang Seng Index was down as investors eyed uncertain prospects for 2022 as well as a continued debt crisis in the mainland’s property market.

A continued regulatory clampdown by Beijing on overseas listings by Chinese firms has also weighed down markets – though expectations that the country’s central bank will add further stimulus in 2022 offered some hope.

 

‘Fits and starts’

Some 13 million citizens in the city of Xi’an entered their seventh day in a lockdown, which is proving tough for local residents.

But trading volumes remain thin going into the new year, when prospects for global growth and the long-term impact of the Omicron variant are expected to become clearer.

Moody’s economist Mark Zandi said in a note the Omicron wave would dent growth in the first quarter, but “not have a material impact” on 2022 overall because of a rebound later in the year.

“Even after the Omicron wave abates, there will almost surely be others. But we expect each new wave to be less disruptive to the healthcare system and economy than the wave before it,” he said.

Katie Nixon, chief investment officer for Northern Trust Wealth Management, was also upbeat, saying her firm was “pretty constructive going into 2022”.

“We’re having fits and starts related to this Omicron variant of course. This will create maybe demand delayed but not destroyed,” she said.

There was also optimism on oil markets, with crude holding a roughly one-month high on hopes that the Omicron variant will not dent global travel in the ways many had feared.

 

Key figures around 0830 GMT

Tokyo – Nikkei 225: DOWN 0.56% at 28,906.88 (close)

Hong Kong – Hang Seng Index: DOWN 0.83% at 23,086.54 (close)

Shanghai – Composite: DOWN 0.91% at 3,597.00 (close)

New York – S&P 500: DOWN 0.1% at 4,786.35 (close)

 

• AFP with additional editing by Jim Pollard

 

 

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Shenzhen, Singapore Exchanges to Develop Cross-Border ETF Link

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.

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