Asia stocks advance, US dollar retreats as China drops quarantine rule

HONG KONG - Stock markets in Asia gained while the US dollar softened on Tuesday after China said it would drop its quarantine requirements for inbound visitors, further easing three-year border controls aimed at curbing Covid-19.

China will stop requiring inbound travellers to go into quarantine starting from Jan 8, the National Health Commission said on Monday.

It will also downgrade the seriousness of Covid-19 as it has become less virulent and will gradually evolve into a common respiratory infection.

China’s blue-chip CSI 300 Index ended higher by 1.2 per cent, while the Shanghai Composite Index added 1 per cent.

Markets in Hong Kong and Australia remained shut for the Christmas holidays.

Japan’s Nikkei share average closed up 0.16 per cent, having given up some early gains that had taken the index to its highest in a week.

Japan will require Covid-19 tests on arrival for travellers from mainland China from Friday, Prime Minister Fumio Kishida said on Tuesday.

Still, shares linked to the return of big-spending Chinese tourists advanced. Takashimaya soared 7.2 per cent after the company said net profit would likely jump fivefold from the previous year.

South Korea’s Kospi Index rose 0.68 per cent while Singapore’s Straits Times Index advanced 0.27 per cent.

Mr Zhu Chaoping, a global market strategist at JPMorgan Asset Management, said the latest policy move from China indicated economic activity in most major cities may return to normal very quickly, which is very positive for investors.

“Most Chinese cities could recover from the first wave of the latest Covid-19 outbreak by January... this would be faster than people have expected,” he said, adding that there was concern of an outbreak lasting longer and weighing on the economy, but that developments generally have been better than expected.

He also said the reopening of China, which also entails resuming outbound visits for Chinese tourists, will lift consumer and service sectors outside the country, particularly those in nearby South-east Asia.

Inbound tourist numbers had recovered 60 per cent to 70 per cent by November for many Asean countries, Mr Zhu said, citing in-house research, but there is still a gap between now and 2019, before the pandemic.

“This gap will be filled by Chinese tourists. This is the last piece of the puzzle,” he added.

As a result, the US dollar moved broadly lower on Tuesday, as currencies from most emerging Asian countries strengthened with risk appetite growing after China scrapped its quarantine rule.

The Singapore dollar rose 0.2 per cent to 1.3452 per US dollar, while the South Korean won gained 0.3 per cent.

Currencies in New Zealand and Australia – often used as liquid proxies for China’s yuan – gained the most. The New Zealand dollar rose by 0.7 per cent to 63.16 US cents, while the Australian dollar rose 0.5 per cent to 67.65 US cents.

Oil prices ticked up on thin trade on Tuesday, on concerns that winter storms across the United States were affecting logistics and production of petroleum products and shale oil.

Brent crude was up 0.5 per cent at US$84.37 a barrel, while US West Texas Intermediate crude was at US$79.89, up 0.3 per cent. REUTERS