Asian equities on Friday rose as investors, still buoyed by a China-US trade deal, turned their focus to earnings season and the global outlook, while they were also cheered by data indicating that China’s economy appears to be stabilizing.
Apart from last week’s blip caused by the US assassination of a top Iranian general, markets have enjoyed a strong start to the new decade, building on a rally late last year.
The gains have been fanned by the “phase one” trade agreement, as well as signs of improvement in worldwide economies, lower interest rates, government stimulus and easing Brexit concerns.
With the prospect of a healthy batch of company reports, there are hopes for further advances.
“It’s very hard to be bearish here,” Federated Investors Management senior equity strategist Linda Duessel told Bloomberg TV.
“We could have really good earnings surprises to the upside” as more profit reports roll in, she said.
All three main indices on Wall Street on Thursday ended at record highs, boosted by the US Senate’s approval of a new North American free-trade deal, while Google parent Alphabet Inc joined Apple Inc and Microsoft Corp to become a trillion-dollar firm for the first time.
The positive energy funneled through to Asia, where most markets ended broadly up.
In Taipei, the TAIEX on Friday closed up 23.36 points, or 0.2 percent, at 12,090.29, rising 0.5 percent from a close of 12,024.65 a week earlier. Turnover totaled NT$131.27 billion (US$4.38 billion).
In Hong Kong, the Hang Seng on Friday gained 173.38 points, or 0.6 percent, to 29,056.42, surging 1.5 percent from a close of 28,638.20 on Jan. 10.
Tokyo’s Nikkei 225 on Friday rose 108.13 points, or 0.5 percent, at 24,041.26, a jump of 0.8 percent from 23,850.57 a week earlier.
The Shanghai Composite on Friday edged up 1.41 points, or 0.1 percent, to 3,075.50, but slid 0.5 percent from 3,092.2 on Jan. 10.
Seoul’s KOSPI on Friday rose 2.52 points, or 0.1 percent, to 2,250.57, surging 2 percent from 2,206.39 a week earlier.
Sydney added 0.3 percent, with Mumbai, Bangkok, Wellington and Manila also well up.
Beijing added to the mood, releasing data showing that the world’s No. 2 economy expanded 6.1 percent last year.
While that was the slowest pace in three decades and well down from 6.6 percent in 2018, it was in line with expectations and the government’s target.
The 6 percent growth for the October-to-December quarter was the same as the previous quarter, while traders were also cheered by figures showing a better-than-forecast rise in retail sales, industrial output and investment.
The slowdown in growth in China has been a major headache for investors over the past few years, as the country’s leaders struggle with the US trade war, slowing global demand and a worrying debt mountain.
Still, while there is hope that this year could see healthy advances for equities, some doubt remains.
Progress on the next round of US-China talks “will continue to hog the limelight in 2020,” said AxiTrader chief Asia market strategist Stephen Innes, who added that “trade discussions between the US and the EU remain open-ended, while the commencement of bilateral EU and the UK trade discussions could get thorny.”
“But perhaps the real elephant in the room, the US [presidential] election in November, will also increasingly preoccupy investors as we move through the year,” he said.
Additional reporting by staff writer
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
The output of the global smartphone industry this year is to contract by 7.8 percent on an annual basis as the COVID-19 pandemic ushers in a global recession, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report on Monday. The global production of smartphones is expected to fall to 1.29 billion units, as the pandemic dampens demand for consumer electronics, leading to a decline in shipments across Europe and North America, TrendForce said. With consumers delaying smartphone purchases and thereby lengthening the device replacement cycle, overall prices would suffer a setback that is expected to negatively affect the profitability of smartphone
ELECTRONICS Lite-On delays sale of unit Lite-On Technology Corp (光寶科技) yesterday said it would postpone the sale of its solid-state drives (SSD) business to Kioxia Holdings Corp, formerly known as Toshiba Memory Holdings Corp, due to disruptions amid the COVID-19 pandemic. Last year, the Taiwan-based electronics components supplier struck the deal with the Japanese firm, agreeing to sell the unit for US$165 million. Citing unfinished integration work due to the pandemic, Lite-On has deferred today’s closing date until further notice, adding that the delay would not have a negative effect on the unit’s operations. AUTO PARTS Hiroca approves dividend Automotive interior parts supplier Hiroca
ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016. Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year. North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a