Japan, South Korea stocks set for stellar gains in Nov, China lags

Investing.com-- Japan’s Nikkei 225 and South Korea’s KOSPI were the best performers in Asia in November as the prospect of a less hawkish Federal Reserve boosted risk assets across the region. 

But Chinese stocks lagged their regional peers for the month, hampered chiefly by concerns over slowing economic growth and laggard stimulus measures from Beijing. A string of weak economic readings from the country kept traders largely wary of local markets, as did concerns over a meltdown in the country’s property market. 

Other Asian bourses were set for strong gains in November, as less hawkish signals from the Federal Reserve, coupled with softer U.S. inflation and labor market data spurred bets that the central bank will not raise interest rates any further. Australia’s ASX 200 was trading 3.9% higher for the month, while India’s NSEI was set to add 5.3%. 

Nikkei near 33-year highs on dovish BOJ bets, strong earnings 

The Nikkei briefly hit 33-year highs in November, and was trading up 7.9% for the month. 

Foreign investors had piled steadily into Japanese stocks this year, with the trend picking up in November after the Bank of Japan struck a dovish tone in its policy meeting at the beginning of the month.

The BOJ made few changes to its ultra-dovish policy, and also signaled that it was in no hurry to begin tightening policy, especially as recent data also suggested that Japanese economic growth was under pressure. The country’s gross domestic product shrank much more than expected in the third quarter. 

A dovish BOJ has been a key point of support for Japanese stocks this year, given that it is among the few major central banks that still plans to maintain easy policy and asset buying measures.

Strong third-quarter earnings, particularly from index-heavy automobile and bank stocks also boosted sentiment towards Japanese markets. 

Chipmaker gains, short-selling ban boost KOSPI

South Korea’s KOSPI was set to add 10.3% in November, with support coming chiefly from a rebound in heavyweight chipmaking stocks as markets grew more optimistic over an artificial intelligence-fuelled spike in demand. 

But the KOSPI’s biggest gain during the month was spurred by a government ban on short-selling. The ban, announced earlier in November, had triggered a nearly 6% intraday spike in the KOSPI. 

Chinese stocks lag as economic concerns persist

China’s Shanghai Shenzhen CSI 300 index was set to lose about 2% in November, while the Shanghai Composite and Hang Seng indexes were set to end the month largely unchanged. 

Investors remained largely averse to Chinese markets as weak economic readings from the country continued to pile in, while Beijing also appeared to be dragging its feet on more stimulus measures.

The CSI 300 was also set for a fourth straight month of losses, and remained close to lows last seen in March 2019. 

Investors have been clamoring for more targeted, fiscal measures from Beijing to shore up economic growth. But beyond stimulus measures, Chinese businesses are also struggling with a severe decline in overseas demand.