Bulls Rush in as FOMO for Asia Stocks Builds on Trade Optimism

(Bloomberg) -- So much for caution.

There's a palpable sense of FOMO -- Fear of Missing Out -- in the air Wednesday, with Asia investors rushing back into equity markets, especially in Hong Kong. That's just a day after appearing hesitant to move too firmly into risk-on mode while awaiting signals from the latest round of trade talks.

Hong Kong's benchmark Hang Seng Index and the Philippine Stock Exchange Index both climbed more than 2 percent each to lead the charge, as Japan, South Korea, Taiwan and others also rose. The MSCI Asia Pacific Index was up 1.3 percent as of 5:14 p.m. in Hong Kong, making its five-day winning streak its biggest gain since early November.

President Donald Trump's highly anticipated prime-time Oval Office address on the border wall and government shutdown appeared to do little to move the needle for investors in Asia. But his earlier tweet proclaiming “Talks with China are going very well!” was a different story.

Then, in late afternoon trading, when most major markets in the region had shut, a Chinese government spokesperson said in Beijing that the nation and the U.S. concluded trade talks that were extended by one day, and that China will be releasing a statement soon on the result.

If that conclusion is good with at least some semblance of progressive discussions, Thursday will likely see another solid rally. But for Wednesday, investors didn't take any chances and piled in earlier in the day before the equity rally left the station without them.

“The trade talks overshadow everything else and there remains optimism on that front,” Bloomberg Markets Live strategist Mark Cudmore said in a post. As he notes, there was nothing revolutionary in Trump's address to the nation on his desire for a border wall, which is good news for risk assets. “It was one of the unknown events that was limiting risk taking,” he said.

After months of spinning wheels, prospects have suddenly brightened for a resolution to the trade conflict. Faced with slumping equity markets and an uncertain economic outlook given the government shutdown and impasse with the Democrats in Congress over funding for his southern border wall project, Trump is no doubt looking for a win.

And for investors across Asia, trade remains the key, given the widespread exposure to China and its global supply chain for many export-dependent countries in the region. The Question of the Day from the Bloomberg Markets Live crew is: How Do U.S. Rates Reprice on a Trade Deal?

China Stimulus

Meanwhile, China continues to take steps to stabilize its flagging economy and lift stock markets. Shares of Chinese carmakers including Geely Automobile Holdings Ltd., Great Wall Motor Co. and Guangzhou Automobile Group Co. jumped after National Development Reform Commission Vice Chairman Ning Jizhe told the state broadcaster CCTV late Tuesday that the government will roll out measures to boost consumption of cars and household appliances.

And the Finance Ministry is set to propose a small increase in the targeted budget deficit for this year, to 2.8 percent of gross domestic product, up from 2.6 percent target last year, according to two people familiar with the matter. The figure was agreed to at its annual work conference in December and will be presented for approval at the National People's Congress in March.

Elsewhere in the region, investors will also be on the alert for corporate earnings, still a key driver for stocks despite all the macro concerns dominating headlines these days. South Korean companies have already started reporting, albeit off to a rough start after Samsung Electronics Co.'s disappointment on Tuesday. Results will trickle in from India later this week: Tech giant Tata Consultancy Services Ltd. reports on Thursday, and Infosys Ltd. on Friday.

Stock-Market Summary

Japan's Topix index up 1.1%; Nikkei 225 up 1.1%
Hong Kong's Hang Seng Index up 2.3%; Hang Seng China Enterprises up 2.2%; Shanghai Composite up 0.7%
Taiwan's Taiex index up 1.8%
South Korea's Kospi index up 1.9%; Kospi 200 up 2.3%
Australia's S&P/ASX 200 up 1%; New Zealand's S&P/NZX 50 up 1.4%
India's S&P BSE Sensex Index up 0.3%; NSE Nifty 50 up 0.1%
Singapore's Straits Times Index up 1.1%; Malaysia's KLCI down 0.3%; Philippine Stock Exchange up 2.8%; Jakarta Composite up 0.1%; Thailand's SET down 0.2%; Vietnam's VN Index up 1.1%

To contact the reporter on this story: Eric Lam in Hong Kong at elam87@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Divya Balji, Cecile Vannucci