Hong Kong stocks surge, yuan at two-year high as Biden’s wins in Michigan and Wisconsin allay fear of US election deadlock

Hang Seng Index completed the best gain in four months as rout in Alibaba shares ends, Asian markets at highest point since February 2018

Biden won Michigan and Wisconsin, boosting his electoral votes closer to 270 to take the White House

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Traders are bracing for a hotly-contested outcome in US presidential election as Joe Biden gains momentum in the race to White House. Photo: AP

Published: 10:45am, 5 Nov 2020Updated: 5:06pm, 5 Nov 2020

Hong Kong and China stocks rallied, with the city’s benchmark gauge capping its best single-day performance in four months while the yuan climbed to a two-year high. Joe Biden’s wins in Michigan and Wisconsin took him closer to the finish line while an Australian bookmaker made early payout for bets on his win.

The Hang Seng Index climbed 3.3 per cent to 25,695.92 for the biggest rally since July 6. Alibaba, which owns the South China Morning Post, rebounded from its record slump on Wednesday triggered by the suspension of its affiliate Ant Group’s stock offering.

The Shanghai Composite Index added 1.3 per cent. China’s yuan strengthened against the US dollar for a sixth consecutive day, taking it to the strongest level versus the US dollar since 2018. A Biden victory is interpreted by traders as positive for yuan assets because of his milder approach to trade relations with China.

“As US election event risk is out of the way, while a Biden presidency implies more predictable foreign and trade policy, which would particularly be beneficial for China equities,” said Chetan Seth, an analyst at Nomura Holdings in Singapore.

In a video address to kick off China’s International Import Exhibition on Wednesday night, President Xi Jinping promised further opening of China’s internet and digital economy, without providing more details.

Sentiment was also resilient around the region, with the MSCI Asia-Pacific Index rising to its highest level since February 2018. US stocks also rallied in overnight trading, as investors were confident that the key driver of the bull market, corporate tax cuts, will remain intact no matter who wins the presidential race.