· Dow futures fall nearly 300 points as Wall Street looks set to shed gains from historic November
Stock futures fell in early morning trading on Monday as the market looks set to shed some of the historically strong gains seen so far in November.
Futures on the Dow Jones Industrial Average fell 281 points. Meanwhile, S&P 500 futures and Nasdaq 100 futures traded lower.
Futures took a leg down after Reuters reported that the Trump administration is weighing blacklisting Chinese leading chipmaker SMIC as well as national offshore oil and gas producer CNOOC. The move would limit their access to American investors and escalate tensions with China before President-elect Joe Biden takes over.
· Investors should allocate up to 20% of their portfolios to China over the next decade, strategist says
Investors need to allocate more of their portfolios into China, as “geopolitical diversification” is going to be a more crucial consideration in the years ahead, according to one investment strategist.
Currently, investors globally have about less than 5% of their shares invested into China, said Paul Colwell, head of the advisory portfolio group for Asia at insurance brokerage Willis Towers Watson.
Pension funds and endowments have between 3% and 5% allocations to China, according to a Willis Towers Watson report, which cited a recent survey by data analytics firm Greenwich Associates.
The weightage of Chinese A-shares — or shares that are traded on the mainland — is 5.1% of the MSCI Emerging Markets index as of August 2020, according to the index provider.
“We just don’t think that’s enough to be fully prepared for the new world order,” Colwell told CNBC’s “Squawk Box Asia” on Monday. They should increase their allocation to Chinese shares up to 20% over the next decade, he added.
“For investors to properly position their portfolios for the post-Covid world ahead, in the new world order, they need to have more of their investment portfolios allocated into China,” Colwell said. “Geopolitical diversification is going to be a much more important portfolio … consideration in the years ahead.”
· Asia-Pacific stocks fall as China says its manufacturing activity grew in November
Stocks in Asia-Pacific fell in Monday trade as investors digested the release of China’s official manufacturing Purchasing Managers’ Index (PMI) for November.
China’s National Bureau of Statistics announced Monday that the official manufacturing PMI for November was at 52.1. That was above expectations for a 51.5 reading forecast by analysts in a Reuters poll.
PMI readings above 50 signify expansion while those below that level represent contraction. PMI readings are sequential and show month-on-month expansion or contraction.
Monday’s data release represented the ninth straight month of expansion for Chinese manufacturing recovery as the country continues to see a strong bounce from the coronavirus pandemic.
South Korea’s Kospi fell 1.6% to close at 2,591.34.
Meanwhile, shares in Australia edged lower, as the S&P/ASX 200 declined 1.26% on the day to 6,517.80. Treasury Wine Estates saw its stock plunge nearly 7% after the firm announced Monday it would reallocate some wine intended for China and reduce costs following Beijing’s imposition of tariffs on Australian wine.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1.3%.
Markets in India were closed on Monday for a holiday.
· Nikkei ends lower, posts biggest monthly gain in near 27 yrs on vaccine cheer
Japan’s benchmark Nikkei closed lower on Monday but posted its biggest monthly gain in nearly 27 years, as optimism over progress in COVID-19 vaccine development and fading uncertainty surrounding the U.S. election boosted risk appetite.
The Nikkei share average ended 0.79% lower at 26,433.62, snapping its four consecutive sessions of gains. But the index saw a 15% jump in November, its biggest monthly gain since January 1994.
The broader Topix also marked its best month since April 2013, but closed 1.77% lower at 1,754.92.
Global markets were dominated by a surge in risk appetite this month on Joe Biden’s U.S. presidential win and on promising news surrounding vaccine efficacy rates.
· China stocks fall but gain 5% in November as recovery picks up steam
China stocks ended lower on Monday, but posted gains in November, underpinned by stocks in traditional industries, as more data pointed to a continued recovery in the world’s second-largest economy against the backdrop of the COVID-19 pandemic.
The blue-chip CSI300 index fell 0.4%, to 4,960.25, while the Shanghai Composite index slipped 0.5% to 3,391.76, reversing earlier gains as investors booked profits.
Sentiment was hit by concerns over Sino-U.S. tensions.
The Trump administration is poised to add China’s top chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, according to a document and sources.
Though for the month CSI300 gained 5.6%, while SSEC added 5.2%, both posted their biggest monthly advance since July.
· European markets open lower as stocks pause after mega month
European markets opened lower Monday morning as global stocks pause for breath following a bumper month on the back of positive vaccine news.
The pan-European Stoxx 600 slid 0.5% in early trade, oil and gas stocks shedding 2.3% to lead losses as all sectors except healthcare slid into negative territory.
Reference: Reuters, CNBC
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