· Some Asia-Pacific markets soared over 30% in 2020 — others dropped more than 10%
As 2020 draws to a close, it appears to have been a mixed year for markets in Asia-Pacific as the world continues to look toward a recovery from the coronavirus pandemic.
China’s Shenzhen component is a standout among the region’s major markets, having risen 38.73% in 2020. The country’s CSI 300 index, which tracks the biggest firms listed on the mainland, was also among the region’s top performers as it rose 27.21% for the year.
Those figures echo China’s tremendous economic recovery after the country earlier this year instituted lockdowns to stem the virus’ spread.
Elsewhere, South Korea’s Kospi also saw robust gains, soaring more than 30% for the year.
Here’s a look at the 2020 performance for major indexes in Asia-Pacific, based on CNBC calculations:
Australia’s S&P/ASX 200: -1.45%
China’s CSI 300: +27.21%
China’s Shanghai composite: +13.87%
China’s Shenzhen component: +38.73%
Hong Kong’s Hang Seng index: -3.4%
India’s BSE Sensex: +15.75%
India’s Nifty 50: +14.9%
Indonesia’s Jakarta Composite: -5.09%
Japan’s Nikkei 225: +16.01%
Malaysia’s FTSE Bursa Malaysia KLCI Index: +2.42%
Philippines’ PSE Composite Index: -8.64%
South Korea’s Kospi: +30.75%
Singapore’s Straits Times index: -11.76%
Taiwan’s Taiex: +22.8%
Thailand’s SET Composite index: -8.26%
Vietnam’s VN-Index: +14.87%
Northeast Asia: Potential investor safe haven
Going into 2021, global investors may favor stocks in China, Japan, Taiwan and South Korea, according to Jim McCafferty, joint head of Asia-Pacific equity research at Nomura.
“Our view is that the Covid management practices of governments around the region in Asia have been far superior to what we’ve seen in the West and I think the market’s kind of moving on,” McCafferty told CNBC’s “Squawk Box Asia” in late November.
“The weight of money in this region tends to be in Northeast Asia,” he said. “I think going into 2021 a lot of global investors that need to be in equities will really look at Northeast Asia as a safe haven.”
Still, countries such as Japan and South Korea saw a spike in virus infections in recent weeks — though at a relatively smaller scale as compared with their Western counterparts.
Vaccine distribution risk
Meanwhile, Javelin Wealth Management CEO Stephen Davies told CNBC’s “Street Signs Asia” in mid-December that the time taken for the coronavirus vaccine to be rolled out is a risk factor.
“I am not necessarily sure that it’s unique to Asia but obviously the risk to the downside is that the rollout of vaccine takes much longer than expected,” Davies said.
That could result in the recovery trade taking “longer to come through” and markets running into a “period of fatigue” as investors see that the economic fallout is not actually going away soon, he said.
In Asia, Singapore was the first country regionally to receive the Pfizer-BioNTech vaccine, according to local media reports in December.
Still, Davies noted that during the early days of the pandemic, experts predicted it would take years to develop an effective vaccine for coronavirus. That timeframe has been drastically shortened. “So far those expectations have proved to be unnecessarily pessimistic,” Davies said.
“We’re still looking on the positive side and still working on the basis of that, that by the latter part of 2021 economic recovery on a broad basis will become much more apparent,” the CEO said.
Port Shelter Investment Management’s Richard Harris told CNBC’s “Squawk Box Asia” on Wednesday that the markets “look quite good for 2021.” Valuations may still be high, but Harris suggested that the market is likely to be driven by the presence of “enormous liquidity,” as major central banks globally have seen “huge increases” in their balance sheet.
“We’re looking at something like five times the size of the balance sheets of the four big central banks, you know: Europe, U.S., Japan, U.K.,” he said. “That’s an enormous amount of money that has to slosh around the system and it’ll find a home in assets.”
Furthermore, he added, good news surrounding the coronavirus is expected to come out periodically next year and “drown the concerns that people have.”
· China telco shares lose 5% in first trading day since NYSE delisting announcement
China’s three biggest telcos saw their shares drop as much as 5% in Hong Kong on Monday, the first trading session since the New York Stock Exchange (NYSE) said it would delist the firms under a plan China branded “political” and of “limited” impact.
· Asia shares reach record, Nikkei restrained by lockdown risk
Asian shares resumed their ascent on Monday as investors pinned their hope on vaccines to eventually deliver a global economic upturn, even as a possible tightening in virus rules for Tokyo pulled Japanese stocks off 30-year highs.
After a slow start, MSCI’s broadest index of Asia-Pacific shares outside Japan swung 1.2% higher, hitting another all-time peak.
South Korea climbed 2% to a record, led by the chip and auto sectors, while Chinese blue chips added 0.3%.
E-Mini futures for the S&P 500 were steady after also touching a record high. EUROSTOXX 50 futures were flat, while FTSE futures rose 0.4%.
Investors are still counting on central banks to keep money cheap while coronavirus vaccines help revive the global economy over time, though much of that optimism is already priced in and the virus still spreading.
Japan’s Nikkei shed early gains, falling 0.4% after Prime Minister Yoshihide Suga confirmed the government was considering a state of emergency for Tokyo and three surrounding prefectures.
Investors are cautiously watching runoff elections in Georgia for two U.S. Senate seats on Tuesday that will determine which party controls the Senate.
· European shares kick off 2021 with rally on Brexit and vaccine optimism
European shares rallied in the first trading session of the year as a landmark Brexit trade deal and coronavirus vaccine drives across the continent bolstered expectations of a strong economic rebound.
The pan-regional STOXX 600 index gained 1.2% to touch fresh February 2020 highs, with mining and travel & leisure stocks among the top gainers.
Reference: CNBC, Reuters
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