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New virus strain sickens markets

(ATF) Hong Kong: Asian markets were broadly lower after reports of a new variant of the coronavirus in the United Kingdom set off alarm bells with several countries suspending travel to a nation already grappling with failed Brexit talks. 

“The new strain transmits more easily than the previous variant but there is no evidence that it is more likely to cause severe disease or mortality,” a UK government website said.

Hong Kong’s Hang Seng benchmark slid 0.72%, Japan’s Nikkei 225 index dipped 0.18%, Australia’s S&P ASX 200 benchmark was flat and the regional MSCI Asia Pacific index slipped 0.91%.

But mainland China’s CSI300 index outperformed, adding 0.94% after the country’s annual Central Economics Work Conference (CEWC), which ended on Friday, signalled supportive policies for housing, manufacturing and domestic demand driven industries.

“The readout suggests that policymakers are keen to withdraw stimulus and renew attention to longer-term financial risks but will do in a carefully phased manner,” Eurasia Group said in a note.

China: ‘No sharp turns’ 

“Indeed, the language here is a bit more cautious than expected, stressing a balance between ‘continuity, stability and sustainability’ and pledging ‘no sharp turns’ in policy.”

Some analysts are expecting changes in the interest rate policy next year after the CEWC signalled the upcoming rise by terming the monetary stance as “prudent”, and that policy would be “reasonable” and “appropriate”. 

“That may seem like a minor addition. But subtle changes in language have flagged forthcoming policy shifts in the past. We expect PBOC policy rates to rise by 30bps in 2021, whereas most analysts think the PBOC will remain on hold,” said Julian Evans-Pritchard, Senior China Economist at Capital Economics after the PBOC held rates steady on Monday. 

Meanwhile, investors scrambled to the safety of US Treasuries with the 10-year yield falling 4 basis points to 0.89%, which also contributed to the recovery of the dollar whose value against a basket of currencies jumped 0.9% to 90.78.

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Asia Stocks

· Japan’s Nikkei 225 index dipped 0.18%

· Australia’s S&P ASX 200 edged down 0.08% 

· Hong Kong’s Hang Seng index declined 0.72%

· China’s CSI300 added 0.94%

· The MSCI Asia Pacific index slipped 0.91%

Stock of the day

JD Health jumped 12.2% after it reported a surge in the number of JD Health users and those who paid for health services. It also topped the volumes of shares traded on the Hong Kong Stock Exchange. 

Umesh Desai

Umesh Desai is the Executive Editor at Asia Financial. Prior to this he spent over two decades with Reuters News as Asia Pacific Chief Correspondent in Hong Kong and Bureau Chief in Bombay. Before becoming a journalist Umesh was a credit ratings analyst with Moody's arm in India - ICRA. A chartered accountant by training, Umesh began his career as an equity analyst. His Twitter handle is @umesh_desai


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