Asian stock markets fall amid virus surge
Though the data is not bad for November, we believe that the spread of COVID-19 in the rest of the world will continue to limit export orders and delivery of export orders in December if there are lockdowns in the export destinations
REUTERS — Most emerging Asian stock markets fell on Monday as coronavirus cases across the region continues to surge, and investors booked profits at the end of a stellar month of gains underpinned by optimism about an effective COVID-19 vaccine.
Indonesia on Sunday reported a record rise in daily virus cases for the third time in a week, while Hong Kong recorded its highest case count in four months, and infections in South Korea also jumped.
Jakarta stocks dropped as much as 0.7 percent and were on track for their worst day in more than two weeks, and the rupiah eased after three straight sessions of gains.
The KOSPI gave up half a percent, while shares in tourism- reliant Thailand snapped a three-day winning run to tumble one percent.
Vaccine-led rally
“Asia- Pacific stocks trade broadly lower on the last trading day in November, retracing from recent highs. A vaccine-led rally appears to be overstretched, calling for profit- taking,” Margaret Yang, a strategist at the Singapore-based DailyFX, said.
Despite losses, many regional markets were set to record their best monthly performance in years as positive efficacy data from COVID- 19 vaccine trials and hopes of more central bank stimulus support expectations of an economic rebound.
“Vaccines offer the promise that the major disruptions of the pandemic will fade from the scene in 2021,” Frederic Neumann, co-head of Asian Economics Research at HSBC, said.
“Central bankers have signaled greater tolerance for ‘inflation overshoots’ than in the past. Potential fiscal constraints and the lasting scars from an unprecedented growth disruption surely point to a continuation of loose policies,” he added.
Signs that a recovery was underway were strengthened by data that showed China’s November factory activity expanded at the fastest pace in more than three years, pushing Chinese shares to their highest since mid-July.
Analysts warned, however, that a spike in virus cases could still hamper future growth.
“Though the data is not bad for November, we believe that the spread of COVID-19 in the rest of the world will continue to limit export orders and delivery of export orders in December if there are lockdowns in the export destinations,” analysts at Dutch bank ING said in a note.
Trading in most regional currencies was muted, even as the United States dollar plumbed more than two-year lows.