Asia report: Stocks mixed amid Delta concerns, Jay Lee out on parole

by | Aug 13, 2021

Asia-Pacific stocks were in a mixed state at the end of the last trading day of the week, with much attention on Korea as Jay Lee, head of the Samsung chaebol, was released from prison.
In Japan, the Nikkei 225 was down 0.14% at 27,977.15, as the yen strengthened 0.1% on the dollar to last trade at JPY 110.30.

Fashion firm Fast Retailing eked out gains of 0.05%, while among the benchmark’s other major components, automation specialist Fanuc was down 1.69% and technology conglomerate SoftBank Group was 0.11% weaker.

The broader Topix index was in the green, rising 0.15% to end the day at 1,956.39.

On the mainland, the Shanghai Composite was 0.24% weaker at 3,516.30, and the smaller, technology-heavy Shenzhen Composite lost 0.39% to 2,468.74.

South Korea’s Kospi slid 1.16% to 3,171.29, while the Hang Seng Index in Hong Kong was behind 0.48% at 26,391.62.

The blue-chip technology stocks were mixed in Seoul, with SK Hynix up 1%, while Samsung Electronics slid 3.38%.

Other members of the Samsung conglomerate were also in the red, with Samsung C&T down 0.74%, Samsung Life Insurance off 0.39%, and Samsung SDS 1.96% weaker.

Those moves came after Jay Lee, chairman of the Samsung group, was released from prison during the day, after the country’s Ministry of Justice confirmed earlier in the week that he was now eligible for parole.

The so-called ‘crown prince of Samsung’, real name Lee Jae-yong, was arrested in January 2017 on charges of bribery, embezzlement and perjury linked to disgraced and imprisoned former Korean president Park Geun-hye.

He was released from prison in February 2018 after a court suspended his five-year sentence, before being imprisoned again in January of this year after a retrial.

AJ Bell financial analyst Danni Hewson said the sell-off in most of Asia was linked to fears of the ‘Delta’ variant of Covid-19, but investors in Europe appeared to be shrugging that off.

“The closure of Chinese ports in an effort to control the spread of the more infectious Covid strain could add to global supply chain disruptions and become something the market cares about in fairly short order,” she noted.

Oil prices were lower as the region entered the weekend, with Brent crude last down 0.14% at $71.21 per barrel, and West Texas Intermediate losing 0.26% to $68.91. chief market analyst Neil Wilson noted that the International Energy Agency “sharply” downgraded its demand outlook for the rest of 2021 overnight, due to the worsening progress of the pandemic.

“It warned that new restrictions in consuming countries, particularly in Asia, will reduce mobility and oil use,” he said.

“Nevertheless, it says the ongoing OPEC+ restraint will keep the market in balance for now, though a surplus may be seen in 2022 if members and other producers ramp up.”

In Australia, the S&P/ASX 200 was ahead 0.54% at 7,628.90, as the hefty financials subindex managed gains of 0.18%.

Commonwealth Bank of Australia was down 1.75% in Sydney, while among the rest of the ‘big four’ banks, Australia and New Zealand Banking Group was up 0.61%, National Australia Bank added 1.58%, and Westpac Banking Corporation was ahead 1.55%.

Investors in the sunburnt country were keeping a close eye on the country’s Covid-19 situation, as the Australia Capital Territory, containing the federal capital city Canberra, was placed in a week-long lockdown.

The ‘Delta’ variant has been gradually growing in Australia in recent weeks, initially stemming from an outbreak and politically controversial set of restrictions in Sydney and parts of New South Wales.

More than half of the population is now under some form of lockdown, and the country’s quarantine-free travel corridor with New Zealand remains suspended.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 advanced 0.65% to 12,764.06 as investors got their ducks in a row ahead of earnings season in Wellington and the Reserve Bank’s next interest rate decision, both next week.

Travel-related stocks were in the green, with mostly state-owned flag carrier Air New Zealand up 1%, airport operator AIAL adding 0.76%, and booking technology company Serko ahead 2.2%.

On Thursday, the country’s Labour government laid out a tentative plan to reopen the country’s borders, beginning with a trial of home-based isolation and shorter mandatory quarantine for some travellers in October.

If successful, fully-vaccinated travellers from countries considered lower and medium risk would be able to enter New Zealand using a shorter quarantine or home-based isolation, or no isolation at all, from some time next year.

At present, the country has some of the strictest border restrictions in the world, with only New Zealand citizens and residents allowed to return, and all travellers being placed in government managed mandatory quarantine.

Controversy over the lack of quarantine availability, the use of ‘bots’ to snap up spaces, and the granting of exemptions to the closed border to sportspeople, entertainers and Google co-founder Larry Page has seen the system widely criticised recently.

The down under dollars were both marginally stronger on the greenback, with the Aussie last ahead 0.07% at AUD 1.3621, and the Kiwi advancing 0.08% to NZD 1.4270.

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