Asian markets jump as Chinese blue chips hit five-year high
Asian markets climbed to four-month highs on Monday as investors bet on a revival in Chinese activity to sustain global growth, even as coronavirus cases continued to surge in the US.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.5 per cent to its highest since February, while Chinese blue chip stocks surged 4.7 per cent to their highest in five years.
Hong Kong’s Hang Seng climbed 3.11 per cent, while Japan’s Nikkei 225 gained 1.75 per cent.
Most global markets gained ground last week as a raft of economic data from June boosted expectations of a relatively quick recovery from the downturn, though the resurgence of coronavirus cases in the US is clouding sentiment.
“We think there is a case for raising tactical allocation on Asian equities in the context of global equity portfolios,” Nomura analysts wrote.
“We see a number of catalysts that could drive Asia ex-Japan (AeJ) equities’ outperformance over US equities in the near term,” they continued.
“Better Covid-19 trends and mobility data in economies/markets that dominate the AeJ index should translate into faster economic recovery vs the US.”
In the first four days of July alone, 15 US states have reported record increases in new cases of the virus, which has infected nearly 3m Americans and killed about 130,000, according to a Reuters tally.
Robert Rennie, head of financial market strategy at Westpac, said: “It is very clear that the US never got the Covid outbreak under control the way that other countries did.”
“By reopening the economy too soon, we have seen a frightening increase in the pace of new cases.”