China stocks backtrack
CHINA & HONG KONG
The optimism that briefly turned Chinese assets into the world’s best performers faded amid scepticism that there has been any breakthrough with the US on trade.
The Hang Seng China Enterprises Index (HSCEI) fell 1.38% to 10,756.95 at the close, tracking losses in US markets overnight after US President Donald Trump called himself “Tariff Man” and questioned whether a deal with China was possible. China’s Ministry of Commerce issued a short statement Wednesday (5 December) saying the weekend meeting between the two leaders in Buenos Aires was “very successful,” without adding new details.
Investors are losing their appetite for risk only days after an apparent trade truce between the world’s largest economies triggered the biggest two-day surge in the yuan in at least a decade. A relief rally in stocks had sent the Shanghai Composite Index above a key technical level that it has failed to hold three times this year. Even government bonds found buyers amid speculation that a stronger currency gives the central bank room to increase stimulus.
The statement on the Ministry of Commerce’s website said China is “confident” of implementing the results agreed upon at the talks, but did not provide any further details on the outcome. Trump continued to ratchet up pressure on China, saying there will be a "REAL DEAL with China, or no deal at all".
The Shanghai Composite Index retreated as much as 1.5% before paring the drop to close 0.61% lower at 2,649.81. The Hang Seng Index lost 1.62% to 26,819.68, as tech stocks led the decline. Sunny Optical Technology Group Co Ltd(2382.HK) slumped 7.27%, while Tencent Holdings Limited(700.HK) retreated 2.25%.
BAIC Motor Corporation Limited(1958.HK) slumped 11.31%. Daimler AG has raised the prospect of boosting its stake in Chinese partner BAIC(1958.HK), according to people familiar with the discussions, a move that threatens to dry up a key source of profit for domestic automakers. Guangzhou Automobile Group Co Ltd(2238.HK) and Dongfeng Motor Group Co Ltd(489.HK) fell more than 4.1% as the worst performers on the HSCEI. – Bloomberg News.
REST OF ASIA
India stocks declined after the central bank maintained its hawkish stance on inflation while keeping the key policy rate unchanged.
The S&P BSE Sensex Index closed 0.69% lower at 35,884.41 in Mumbai. It fell as much as 1% after the decision. The NSE Nifty 50 Index slipped 0.80% to 10,782.90. Markets across Asia tumbled following the biggest decline on Wall Street since mid-October.
After raising interest rates twice this year, the Reserve Bank of India (RBI) kept its repurchase rate unchanged at 6.5% as predicted by economists surveyed by Bloomberg. Still, policymakers lowered the inflation forecast to a 2.7-3.2% range, citing slowing food price increases and a drop in oil prices, while retaining a stance of "calibrated tightening”.
Investors were expecting some steps by policymakers to boost liquidity after lenders were forced to raise rates, while anticipating a lower forecast for inflation amid a drop in the price of crude oil, India’s biggest import, before the outcome of state elections and a national poll next year. – Bloomberg News.
Shares in Sydney were down on Thursday morning with the S&P/ASX 200 Index 0.39% lower at 5,646.20. Sentiment was downbeat ahead of a meeting by the Organization of the Petroleum Exporting Countries (OPEC), and as US equity futures slumped. The benchmark fell 0.78% to 5,668.35 on Wednesday.
South Korea’s Kospi Index fell 0.63% to 2,088.12 at the open on Thursday, after shedding 0.62% to 2,101.31 the previous session.
The Taiwan Stock Exchange Weighted Index (Taiex) erased 1.65% to 9,916.74.
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