HONG KONG, August 26 -- Hong Kong stocks dived more than 3 per cent in the first few minutes of business on Monday.
Caused by United States President Donald Trump ramped up his trade row with China and the city was hit by fresh violent protests over the weekend. The Hang Seng Index plummeted 3.27 per cent, or 857.33 points, to 25,322 at the open. The benchmark Shanghai Composite Index sank 1.6 per cent, or 46.41 points, to 2,851.02, and the Shenzhen Composite Index, which tracks stocks on China's second exchange, shed 1.96 per cent, or 30.87 points, to 1,547.83.
BEIJING, August 24 -- China said Friday that it will impose further tariffs on U.S. imports worth around $75 billion, in retaliation for planned tariff hikes on Chinese products by Washington.
The Commerce Ministry said it will impose additional tariffs of 5 percent or 10 percent on a total of 5,078 products of U.S. goods, some of which would take effect on Sept. 1 and the rest on Dec. 15. China will also resume imposing additional tariffs of 25 percent and 5 percent on U.S.-made vehicles and auto parts starting from Dec. 15, the Customs Tariff Commission of the State Council announced. The announcement comes as U.S. President Donald Trump has pledged that Washington will impose 10 percent tariffs on $300 billion worth of Chinese goods, effective on those two dates, in a move that would see nearly all imports from Asia's biggest economy taxed. The U.S. decision "has greatly hurt interests" of China, the United States and other countries and "has seriously threatened the multilateral trade system and the free trade system," Beijing said, adding, "China is forced to take reciprocal measures." "We hope China and the United States will resolve differences in a manner acceptable to both sides on the premise of mutual respect, equality, good faith, and consistency of words and deeds," the Customs Tariff Commission said in a statement.
The Trump administration has so far imposed 25 percent levies on a total of $250 billion of Chinese imports in an effort to reduce the chronic U.S. trade deficit with China, as well as to address alleged intellectual property and technology theft by Chinese companies. On Aug. 13, it delayed imposing a 10 percent tariff on laptop computers, cellphones, video game consoles and other "certain articles" imported from China to Dec. 15 from Sept. 1 as planned. The announcement drew some relief from retailers and other businesses concerned that the new levies, which in combination with current ones would have meant tariffs on nearly all Chinese imports, could have dampened consumption especially around the holiday shopping season.
HONG KONG, August 22 -- Hong Kong stocks are poised for their worst quarter since 2015 and corporate earnings are unlikely to save them.
After a sell-off erased more than US$600 billion from the city’s equities, attractive valuations stood as a potential bright spot. But those multiples don’t look so good when analysts keep slashing their profit forecasts for 2019. Their call for an average 19 per cent slump in operating income would be the biggest contraction for Hang Seng Index companies since the global financial crisis, data compiled by Bloomberg show. While a protracted US-China trade war and a weak yuan are to blame for a big chunk of the profit reductions, the latest cuts reveal a deeper issue. With Hong Kong’s slowing economy buckling under the pressure of 11 straight weeks of protests, demand for everything from bank loans to utility gas may be jeopardized. “The third quarter could be even worse given the local political situation and the trade war escalation,” said Jackson Wong, asset management director at Amber Hill Capital. “Potential downside surprises have not been fully reflected in share prices.” Shares of utilities provider Hong Kong and China Gas fell 5.3 per cent on Wednesday after it posted disappointing results and said the local business environment is “full of challenges.” Political unrest in Hong Kong may dampen its sales to the hospitality industry as people opt to cook at home rather than dine out, analysts at Daiwa Securities Group say. The threat from the trade war and weeks of local unrest has been apparent in the property market, as well as hotel occupancy and retail sales. CK Asset Holdings, whose shares fell to lowest since January 2017 last week, postponed a luxury residential project because of the protests. HSBC Holdings and BOC Hong Kong Holdings have lost about 9 per cent this month as investors become increasingly concerned about capital flight.
NEW YORK, August 15 -- It was an ugly day for Wall Street as stocks plummeted on Wednesday (Aug 14) after the US bond market sounded a loud warning that the US economy might be headed towards a recession.
The Dow Jones dived 800.49 points or 3.05 per cent to 2,5479.42, its worst percentage drop of the year and fourth-largest point drop of all time. The wider S&P 500 benchmark fell 85.72 points or 2.93 per cent to 2,840.6, while the tech-heavy Nasdaq Composite sank 3.02 per cent to 7,773.94. Investors were spooked by a scenario known as the “inverted yield curve,” which occurs when the yields or returns on short-term bonds are higher than those for long-term bonds. What it means is that people are so worried about the near-term state of the economy that they are piling into safer long-term investments, pushing up their prices, which sends yields lower. Briefly on Wednesday, the yield on the benchmark 10-year Treasury bond broke below the 2-year rate, a rare event that has been a reliable indicator in the past of economic recessions. Other parts of the yield curve have been inverted for a few months. For instance, three-month Treasury bonds have been yielding more than 10-year Treasury bonds since late May. But the gap there became more dramatic on Wednesday, with three-month Treasury bond paying nearly 0.4 percentage points more than 10-year Treasury bond, greater than the 0.1 percentage point difference seen in late May. Investors also rushed into the benchmark 30-year Treasury bond, pushing its yield to a new record low.
The actions in the US bond market signal that investors are more concerned about the escalating fallout of the trade war between the US and China and worried by signs that economic growth may be slowing around the globe as a result. Before the US market opened on Wednesday, came the latest stream of poor economic data from overseas, notably the weakest Chinese factory output data in 17 years and German data showing the economy contracted in the second quarter. China and Germany both have large trade surpluses with the United States, but they are also important customers for American products. Germany bought goods and services worth US$72 billion from the United States last year. China and Germany have been hit directly by Trump’s tariffs, and more broadly by the disruption to the global economy that the trade conflict has caused. In other recent dismal economic news, the British economy shrank in the second quarter, and growth flat lined in Italy. Singapore and Hong Kong, which are smaller but still serve as vital hubs for finance and trade, are also suffering.
TOKYO, August 13 -- Asian shares slumped on Tuesday (Aug 13) as fears about a drawn out US-China trade war, protests in Hong Kong and a crash in Argentina’s peso currency drove investors to safe harbors like bonds, gold, and the Japanese yen.
MSCI’s broadest index of Asia-Pacific shares outside Japan skidded 1 per cent. Chinese stocks fell 0.8 per cent, while Hong Kong’s main market index tumbled more than 1 per cent to a seven-month low.
“The protests in Hong Kong are negative for stocks, which were already in an adjustment phase because there is talk that the trade war will trigger a recession,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co. Hong Kong’s airport, the world’s busiest cargo airport, reopened on Tuesday, which could ease some concern about the immediate economic impact of protests over the past two months. The protests began in opposition to a bill allowing extraditions to mainland China but have quickly morphed into the biggest challenge to China’s authority over the city since it took Hong Kong back from Britain in 1997. Japan’s Nikkei was also hit hard, down a sharp 1.5 per cent and on course for its biggest daily decline in a week.
US stock futures were 0.13 per cent higher in Asia, but that did little to ease the mood. Stocks in Singapore shed 1.1 per cent to reach their lowest since June 6 after the government slashed its full-year economic growth forecasts. The city state is often seen as a bellwether for global growth because of its importance as a key trade hub. The selling in regional markets came as Wall Street stocks took a beating on Monday, with the S&P 500 losing 1.23 per cent.
Sentiment was already weak due to increasing signs that the United States and China will not quickly resolve their year-long trade war. Markets were hit with further turbulence after protesters managed to close down Hong Kong’s airport on Monday. Traders were also on edge after market-friendly Argentine President Mauricio Macri suffered a mauling in presidential primaries, increasing the risk of a return to interventionist economic policies. Benchmark 10-year Treasury yields were near the lowest in almost three years, gold was pinned close to six-year highs, and the yen was within a whisker of a seven-month peak versus the dollar in a sign of the heightened anxiety in financial markets already battered by global growth woes. “Long-term rates will continue to fall, and stocks will adjust lower, but this is temporary. Major central banks are cutting rates, which will eventually provide economic support,” Mitsubishi UFJ’s Ishigane said. Analysts said that trading could be subdued as many investors are off for summer holidays. Yet, there was no shortage of gloomy news for investors looking to catch their breath from several months of market ructions. The Argentine peso collapsed overnight, falling to 55.85 to the dollar, after voters snubbed Macri by giving the opposition a surprisingly bigger-than-expected victory in Sunday’s primary election. The Merval stock index crashed 30 per cent and declines of between 18-20 cents in Argentina’s benchmark 10-year bonds left them trading at around 60 cents on the dollar or even lower. Refinitive data showed Argentine stocks, bonds and the peso had not recorded this kind of simultaneous fall since the South American country’s 2001 economic crisis and debt default.
The grim backdrop was enough to push investors into safe-havens, and US Treasury yields dropped across the board on Monday as trade worries and political tensions supported safe-haven assets. In Asia on Tuesday benchmark 10-year Treasuries yields fell to 1.6471 per cent. On August 7 yields had skidded to 1.5950 per cent, the lowest since October 3, 2016. Spot gold rose 0.33 per cent to US$1.516.42 per ounce, near the highest in six years. The yen last fetched 105.37 per dollar, and was within striking distance of 105.03, its strongest since the January 3 flash crash. The Swiss franc, which along with the yen is considered a safe haven in times of trouble, traded at 0.9697 per dollar , near its highest in a year. Oil prices edged slightly lower in Asian trading as expectations that major producers will continue to reduce supplies ran into worries about sluggish economic growth. US West Texas Intermediate futures fell 0.33 per cent to US$54.75 a barrel.
TOKYO, August 6 -- Global stocks extended already substantial losses on Tuesday (Aug 6), after Washington designated Beijing a currency manipulator in a rapid escalation of the United States-China trade war, but losses were pared after China set its daily yuan fixing stronger than expected, tempering fears of a currency war.
Safe-haven assets, including bonds and some currencies such as the yen and Swiss franc, benefited as investors scurried to avoid risk. US Treasury Secretary Steven Mnuchin said on Monday that the government had determined China is manipulating its currency, and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing. “Officially labelling China a currency manipulator gives the United States a legitimate reason to take even more steps,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “The markets are now scrambling to factor in the possibility of the United States imposing not only an additional 10 per cent of tariffs on Chinese imports, but the figure being raised to 25 per cent. This is likely to be a protracted trade war without a quick resolution.”
US President Donald Trump vowed last week to impose a 10 per cent tariff on US$300 billion (S$414 billion) of Chinese imports from Sept 1, adding that it can be raised beyond 25 per cent. Some economists reckon the global economy could slip into recession in the coming months if the tariff is increased to 25 per cent. The Trump administration’s dramatic move against China hastened the risk aversion seen in global markets this week. On Monday, Beijing let the yuan breach 7-per-dollar on Monday for the first time since late 2008 in response to the latest US tariffs, which are expected to further aggravate trade tensions between the world’s two largest economies.
On Tuesday, the offshore yuan fell to as low as 7.1397 per dollar in early Asian trade on Tuesday before pulling back to 7.0785 after China's central bank set its daily currency fixing back above the 7 level to the US dollar. The slightly firmer-than-expected morning benchmark rate of 6.9683 was still the weakest since May 2008. The People's Bank of China (PBOC) also said on Tuesday it was selling yuan-denominated bills in Hong Kong, in a move seen as curtailing short-selling of the currency. US stock-index futures rebounded, erasing earlier declines. S&P 500 Index futures contracts expiring in September rose as much as 0.7 per cent as of 1.06pm in Tokyo as the yuan steadied, after falling as much as 1.9 per cent. Dow Jones Industrial Average contracts ascended 0.6 per cent while those on the Nasdaq 100 added 0.5 per cent. Asia stock markets markets plunged on opening before paring their losses after China's latest yuan fixing. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.85 per cent after brushing its lowest since January. Tokyo opened nearly 3 per cent lower before recovering to end the morning 2 per cent down. Hong Kong fell 2.4 per cent while Shanghai and Sydney shed 2.6 per cent. Manila and Wellington were also down around 2 per cent.
In Singapore, the Straits Times Index opened down 1.5 per cent before recovering some ground to trade 19.55 points or 0.6 per cent lower at 3,174.96 by the midday break.
AMSTERDAM, July 29 -- Alcohol-free beers drove rising sales at Dutch brewing giant Heineken in the first half of the year, but its shares slumped on Monday as profitability was flat.
The world's second-largest brewer said net profit was down by 1.4 percent to 936 million euros ($1.0 billion) while sales jumped to 13.6 billion euros, up 5.9 percent from the same period last year. Operating profit rose mostly due to a positive effect of currency changes, and its operating profit margin -- revenues minus costs -- actually dipped. The company's shares fell by more than 5.0 percent in midday trading in Amsterdam. A key driver of the Heineken brand's 6.9 percent growth was the demand for low or no-alcohol beer, with Heineken 0.0 now available in 51 markets around the world, the brewer said. Heineken said its partnership within China Resources Beer became effective at the end of April, now giving it access to the fast-growing Chinese premium beer market. Under the deal the Dutch brewer took a 40 percent stake in the holding company that controls China Resources Beer, merged its current operations into the firm and licence it to the Heineken brand for use in the Asian giant. The two firms are joining forces at a time when competition is becoming fierce in the Chinese market, with consumers turning towards foreign beers and premium products as middle class incomes rise.
SHANGHAI, July 29 -- The much-advertised new Star Market of the Shanghai Stock Exchange opened to a stellar start with all 25 new shares soaring by an average of 140 per cent.
The euphoria did not last long. By the second day, all but four of the new listings in China’s latest answer to America’s Nasdaq fell as investors took flight. The volatility looks set to continue for a while.
Collectively, the two dozen firms raised 37 billion yuan (US$5.4 billion). The trillion-dollar question on everyone’s minds is: Will the Science and Technology Innovation Board become another casino for China’s predominantly retail investors, or help viable new hi-tech unicorns raise funds and realize their true value? The timing is more auspicious than the launch of its cousin, ChiNext, a decade ago in Shenzhen. That was in the midst of the global financial crisis, and its total valuation is still 60 per cent off its peak in 2015. Policymakers want it to be different this time. The ongoing trade war with the United States means many Chinese start-ups will prefer to raise capital onshore than try to list in a country that has been openly hostile to China’s technological rise.
Is China’s tech board just another ‘casino’ for excitable punters?
Star Market was effectively created on the order of President Xi Jinping in November. It aims to provide a freer market mechanism to fund technological innovation rather than infrastructure projects. To discourage inexperienced retail investors, trading on the new market is restricted to players with at least two years of experience and 500,000 yuan in available funds. But the thresholds may be too low to make a difference. More than 140 firms in technology and science have applied for listing, which could collectively raise 128.8 billion yuan. If successful, that will certainly give Hong Kong’s stock exchange a run for its money. Since last year, the city has revamped its listing rules in a bid to attract mainland Chinese firms. The loosening of rules includes allowing companies with dual-class share structures and unprofitable biotechnology start-ups to go public. Dual-class structures allow existing owners or founders to retain their control of the company even if they only own a minority of shares after listing.
Star Market will be the first exchange in China to allow unprofitable technology companies, not just biotech start-ups, to list. A new IPO system means companies are required to disclose their earnings and operations in their listing applications. But regulators will let the market decide their valuations once their applications have been cleared. Beijing has long wanted to woo back national champions such as Alibaba Group (which owns the South China Morning Post), Tencent and Xiaomi to list onshore. To avoid fizzling out like ChiNext did, Star Market needs to prove that it is truly market-driven and able to attract big-ticket unicorns.
PARIS, July 9 -- The number of funds domiciled in France has fallen steadily in recent years despite lobbying to attract more asset management business to the country following the upheaval caused by Brexit.
There were 10,804 funds domiciled in France at the end of last year, according to financial regulator the Autorité des Marchés Financiers, which used data from the European Fund and Asset Management Association. This was down from 11,790 at the beginning of 2012. The decline is striking given that Europe's other large fund jurisdictions — Luxembourg, Ireland, Germany and the UK — all registered increases. The news is a blow to France, which had hoped the UK's decision to leave the bloc would open the door to it becoming a larger hub for fund management. Paris's business district launched a quirky campaign shortly after the 2016 EU referendum to try to lure London-based financial workers across the Channel. The AMF attributed the fall to the transfer of funds to other jurisdictions, although it added that the total fund number had remained stable since 2017. "Delegation" rules allow funds to be domiciled in one part of the EU, with investment management activity taking place elsewhere. Large numbers of investment managers have established entities in Luxembourg and Ireland in preparation for Brexit.
Luxembourg is the biggest fund domicile in Europe with nearly 15,000 funds. France is the second-largest market while Ireland has overtaken Germany to claim third spot. It is not all bad news for France. A year ago BlackRock, the world's biggest asset manager, chose Paris over London for its new base to provide alternative investment services across Europe and Asia, although London remains its main European office. Part of the French campaign included French president Emmanuel Macron wooing Larry Fink, BlackRock chief executive, at the Elysée Palace. Other financial groups that have beefed up their presence in the French capital include US banks Citigroup and Bank of America.
Author: Lora Smith
BANGKOK, July 5 -- The Stock Exchange of Thailand (SET) Index at the end of June show an increase of 6.8 per cent over the previous month, marking it as the best performer in Asia, and up 10.6 per cent from the end of 2018 to 1,730.34 points.
The average daily trading value of SET and Market for Alternative Investment (mai) in June was Bt60.53 billion (approximately US$1.95 billion), up 3.1 per cent from the preceding month. Foreign investors were the net buyers of Thai shares for the third straight month in June, gaining the highest monthly net inflows in the region. Forward and historical P/E ratios of SET were 16.4 times and 18.6 times respectively at end-June, compared with the average of the Asian peers of 14.5 and 16 times respectively. Dividend yield ratio of SET was 2.98 per cent at the mid-year point, above Asian stock markets’ average ratio of 2.79 per cent. A combined market capitalisation of SET and mai at end-June jumped by 10.9 per cent from end-2018 to Bt18 trillion, moving in tandem with the SET Index. Funds mobilized through IPOs during the first half of 2019 stood at Bt8.53 billion.
In June, the average derivatives trading volume rocketed by 65 per cent from the previous month to 590,647 contracts per day. SET Senior Executive Vice President Soraphol Tulayasathien said that the SET Index rose to the highest among Asian bourses with the most value of foreign net inflows in June, boosted by the prospect of continuity in Thailand's economic policies following a clearer picture of local politics, coupled with a string of positive external factors including US-China’s easing of trade tensions and the US Federal Reserve’s gradual move in monetary policy.
Author: Pete McGee