Asian stock markets down, except China, in November

ISTANBUL

Asian stock markets were on a downward trend in November, except for China, as Beijing diverged in the region due to the government’s supportive decisions.

The risk appetite in Asian markets was under pressure last month due to fueling concerns that US President-elect Donald Trump’s promised tariffs, especially on China of up to 60% on all products, signaled he would once again weaponize tariffs in economic competition.

Trump recently said that he would initially impose a 10% tariff on all imports from China, as well as 25% on products from Canada and Mexico.

Despite the odds, Chinese equity markets were positive in November on the optimism that China does not intend a trade war with the US, coupled with the estimates that the People’s Bank of China (PBoC) will loosen its monetary policy to support the economy.

Analysts said US tariffs would affect the global supply chain and manufacturing industry strategies of countries -- trade balances may change.

In November, while China’s Shanghai Composite Index rose 1.42%, Japan’s Nikkei 225 fell 2.23%, South Korea’s Kospi Index declined 3.92%, and Hong Kong’s Hang Seng Index was off 4.40%.

In the January – November period, the Nikkei 225 gained the most with a 14.18% hike, while the Hang Seng index soared 13.94% and the Shanghai Composite Index climbed 11.82%. The Kospi Index fell 7.51%​​​​​​​.

Analysts noted that China may focus on economic stimulus policies to make up for the increased tariffs by supporting economic growth.

Chinese President Xi Jinping said at the Asia-Pacific Economic Cooperation (APEC) in Peru that China and the US should seek ways to continue and expand dialogue in a smooth transition, emphasizing that economic separation and the disruption of supply chains are not solutions.

The PBoC, meanwhile, kept its one-year and five-year loan prime rates unchanged in November.

As for Japan, the Tokyo Consumer Price Index (CPI) climbed 2.6% year-on-year in November, signaling hawkish steps from the Bank of Japan (BoJ), and the Tokyo core CPI increased 2.2% on an annual basis, above expectations, while industrial production rose 3% month-on-month in October, below estimates.

The BoJ is expected to keep its policy rate unchanged in December, while the possibility of a 25-basis-point rate hike is estimated to have a 30% likelihood in the money markets.

The Bank of Korea (BOK) cut its policy interest rate by 25 basis points to 3% in November, the second rate cut of the year. Inflation in October fell below the BOK’s target of 2%, supporting the monetary easing cycle.

Uncertainties about Trump’s tariffs and their effect on trade make it difficult to estimate the BOK’s future steps, though the bank may opt for dovish policies after the positive inflation data, said analysts.

Sung Tae-yoon, the South Korean presidential office’s policy chief, said in a recent statement that Trump’s tariffs on Chinese, Mexican and Canadian goods will inevitably affect South Korean companies exporting to the US, according to Yonhap News Agency.

*Writing by Emir Yildirim