Asian stocks struggle to gain, S. Korea slides on COVID-19 surge

Most Asian stock markets struggled to gain on Tuesday and South Korean shares slumped as concern over a wave of local coronavirus infections hit one of the countries viewed as having done best at quelling outbreaks.

The mood was downbeat after the United States imposed financial sanctions on some Chinese officials on Monday, raising more fears about relations between the two countries, while losses on Wall Street overnight set the tone in early trading.

Malaysia and Indonesia shares gained about 0.3pc, but Chinese shares slipped 0.2pc and Seoul fell 1.6pc.

South Korea reported 594 new coronavirus cases on Tuesday, and health authorities predicted daily cases would hover between 550 and 750 this week, and possibly spike to as much as 900 next week.

Global efforts to combat the health crisis, both with vaccines and economic stimulus, are at the heart of the debate for markets, with investors worried overnight by a report that U.S. drugmaker Pfizer would not be able to deliver extra vaccines until the middle of next year.

Pfizer's vaccine also has a complicated distribution system, which requires consistent ultra-cold storage that could make it hard to spread across hotter and lower-income countries with weak infrastructure.

"You've got stimulus discussions in the U.S., which are stalling at the moment...then there is the issue that the vaccine maybe not being as readily accessible as had been initially hoped," said Mitul Kotecha, senior EM strategist at TD Securities.

"So when you add that to the sanction news, these are all the factors weighing on the markets today."

On currency markets, the yuan fell for a second straight day, while the won slipped as authorities warned the spike in cases next week could "collapse" the country's health system.

As South Korea battles the third and largest wave of infections yet, the government on early Tuesday announced deals with four companies to provide vaccines for 44 million people.

The Thai baht strengthened 0.1pc to hit an 11-month high, while the Taiwanese dollar gained as much as 1pc.

The Thai central bank cancelled a briefing it was supposed to hold on Wednesday to lay out measures to curb the currency's appreciation as Thai exporters expressed the baht's firmness would pose a challenge for recovery.