Vaccine, Stimulus Hopes Lift Asia-Pacific Stocks, Offsetting Concerns Over US Blacklisting of China’s SMIC

The major Asia-Pacific stock indexes finished mostly higher on Friday as investors continued to express optimism over a successful launch of vaccines to combat the spread of coronavirus cases. Rising expectations for a bipartisan end-of-the-year U.S. fiscal stimulus package also underpinned prices.

Traders expressed little concern over the release of the November U.S. Non-Farm Payrolls report that was expected to come in below the previous month’s number. Evidently, it’s no secret the U.S. economy is slowing. Hence the need for more fiscal stimulus. Traders also seemed to be unfazed by the U.S. move to blacklist China’s largest chipmaker.

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 26751.24, down 58.13 or -0.22%. Hong Kong’s Hang Seng Index finished at 26835.92, up 107.42 or +0.40% and South Korea’s KOSPI Index closed at 2731.45, up 35.23 or 1.31%.

In China, the Shanghai Index settled at 3444.58, up 2.45 or +0.07% and in Australia, the S&P/ASX 200 Index finished at 6634.10, up 18.80 or +0.28%.

Pentagon Blacklists China Chipmaker SMIC and Oil Producer CNOOC

China’s largest chipmaker and national offshore oil and gas producer were added Thursday to a blacklist of alleged Chinese military companies, the Pentagon said in an evening statement.

The Department of Defense designated a total of four companies as being either owned or controlled by the People’s Liberation Army.

• Semiconductor Manufacturing International Corp (SMIC).
• China National Offshore Co. Ltd.
• China Construction Technology Co. Ltd.
• China International Engineering Consulting Corp.

The move will likely escalate tensions between the world’s two largest economies and adds to the list of pressing geopolitical issues awaiting President-elect Joe Biden.

The blacklisting of SMIC threatens to hit at the heart of China’s plans to boost its domestic semiconductor industry, a need that has been accelerated by the trade war with the U.S. SMIC is seen as a critical part of China’s ambitions and the latest moves by the Pentagon could hold back the company’s development for several years.

South Korean Stocks Touch Record High on Samsung Electric, SK Hynix Boost

South Korean shares extended their rally on Friday to touch a record high on Samsung Electronics and SK Hynix surge and foreign buying, despite the virus spurt at home.

Shares in the world’s two largest memory chipmakers Samsung Electronics and SK Hynix surged as much as 3.4% and 7.2%, respectively, to their record highs, after rival Micron Technology’s facility in Taiwan faced power outage and on continued optimistic sectoral outlook.

In COVID-19 related news, South Korea’s capital Seoul will require most establishments to close at 9 p.m. each day, acting Seoul major Seo Jeong-hyup told a briefing on Friday, as the country reported 629 new cases on Friday, the most since the first wave of infections in the country peaked in late February.

Naver, the country’s biggest search engine operator, and Kakao Corp, South Korea’s top mobile messenger provider, surged as spiking coronavirus infections at home boosted demand for contactless services.

For a look at all of today’s economic events, check out our economic calendar.