Asia stocks unshackle from US as local themes dictate trading

Stock markets in Asia have kicked off the week with a nice lift: Hong Kong’s benchmark index rallied almost 2 percent at one point, South Korean equities jumped more than 1 percent, and Taiwan and the Philippines also had good starts.

It’s nothing like what happened in the U.S., where the S&P 500 Index had its third-worst Thanksgiving week since 1939. With Monday’s gains, the MSCI Asia Pacific Index is heading for a 1 percent increase in November, and if the rally holds this week it would be its first monthly advance since July.

So what’s causing Monday’s surge? It could be a rally in Hong Kong developers that boosted the Hang Seng Index. Or the Topix index, which edged higher as construction and transport stocks rallied after Osaka won the bid to host the 2025 World Expo. The magnitude of this year’s equity sell-off is also prompting market players to call a bottom in some markets:

Morgan Stanley’s strategist Jonathan Garner called time on his bearish view on emerging markets and upgraded on both EM and Japan for 2019. Jefferies analyst Sean Darby said in a 2019 outlook report that the Topix may climb to 1,900 as a loose monetary policy and cheap yen support the nation’s economy. In Australia, two big research firms were at odds on where the stock market may go next year: Morgan Stanley downgraded shares to underweight, while Citigroup’s Tony Brennan wrote that the S&P/ASX 200 Index may rise to 6,500.

In Taiwan, the key equity gauge rose the most this month after the pro-China Kuomintang inflicted a resounding defeat on leader Tsai Ing-wen’s party in local elections. That could mean an improvement in relations with the mainland and that is good for cross-strait business, according to Bloomberg Markets Live strategist Mark Cranfield.

And in Southeast Asia, both the Singapore and Philippine stock markets were on a tear Monday. In particular, the Philippine Stock Exchange Index jumped more than 1 percent, breaking past the 7,400 level as foreigners stepped back into the market as net buyers for two straight days.

Still, whether the gain can last for the rest of the week is anyone’s guess. As Bloomberg Television’s David Ingles put it, it’s looking like a “monumental week” ahead for the market as we wait for some clarity on two big issues: the China-U.S. spat and the Fed’s tightening cycle. So far, the signs have been positive but as we’ve seen this year, things can change in the blink of an eye. –Bloomberg