Wall Streets’ record high to boost Asia sentiment

Asian markets set to open broadly higher following an upbeat US session overnight. China’s reserve requirement ratio (RRR) cut and trade optimism further boosted sentiment, and a string of improving manufacturing PMI readings across the ASEAN region led to beliefs that a cyclical recovery is around the corner.

A couple of things to take note of today, Singapore’s manufacturing PMI and Hong Kong (HK) retail sales.

Some further improvement in Singapore’s manufacturing PMI is expected in December, as factory output, exports and new orders have grown modestly across ASEAN and the India region. There is a concern is that the pace of expansion is insufficient to make a solid turnaround in falling backlogs, employment and inflation; which suggest the road towards a full recovery will likely remain challenging.

Singapore market registered strong performance on Thursday, and is likely to continue the upward trajectory today following strong lead in US markets overnight. In 2019, the local market has been over-punished by trade uncertainty and economic slowdown, causing it to underperform compared to its global peers.

Hong Kong’s retail sales is forecasted to contract by 25.5% year-on-year, a further deterioration from October’s reading of -24.3%. A recession is happening in Hong Kong and it is likely to deepen further. Retailers have suffered a bad Christmas period due to sharp decline in tourism arrivals this year. Since protests first started in April, visitor numbers have collapsed. October’s arrival numbers tumbled by 43.7% from a year ago.

The HK stock market, however, is defying gravity. PBoC’s RRR cut has boosted HK-listed China financial firms, namely banks, brokerages and insurance. Hang Seng Index has broken out a key resistance level at 28,60s0 and moved decisively higher overnight.

Hong Kong 50 – Cash

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