China stocks backtrack


Optimism fades amid scepticism that there has been any breakthrough with the US on trade
Chief Investment Office06 Dec 2018
Photo credit: AFP Photo


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.

The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.

The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.

The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.

DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.

To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.

The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.