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Asian markets mostly up but Huawei, trade war loom large
HONG KONG, May 21, 2019 (BSS/AFP) – Asian markets mostly rose Tuesday but
concerns about the Huawei row and broader China-US trade war kept investors
on edge, with analysts warning the crisis could rumble on for some time.
Regional investors were spooked by a sharp drop in New York’s tech-rich
Nasdaq after Google said it was beginning to sever ties with the Chinese
telecoms giant, days after Donald Trump’s decision to bar it from the US
market and put it on a sales blacklist.
The Huawei development — with the US citing national security concerns —
has muddied the waters in the tariffs stand-off between Washington and
Beijing, which was thought to have been close to conclusion at the start of
the month.
And now some observers are warning that stalled talks between the economic
superpowers might not see any progress before a hoped-for meeting between
Trump and China’s Xi Jinping at the G20 in June.
“The market was a little optimistic that a trade deal would just get done
here this month,” Brett Ewing, chief market strategist at First Franklin
Financial Services, told Bloomberg News.
Dealers have “definitely come to terms with a longer term trade
negotiation process”.
While the Commerce Department issued a 90-day reprieve on the ban on
dealing with Huawei, saying breathing space was needed to avoid huge
disruption, the two appear to be digging their heels in.
And on Monday China’s envoy to the European Union called the Huawei move
“wrong behaviour”, adding “there will be a necessary response”.
Zhang Ming warned: “Chinese companies’ legitimate rights and interests are
being undermined, so the Chinese government will not sit idly by.”
The developing crisis had a mixed impact on Asia’s tech firms, with
Samsung Electronics, a rival to Huawei in the smartphone market, rallying 2.7
percent.
Analysts say the US ban will damage Huawei’s ability to sell phones
outside China, offering Samsung a chance to consolidate its position at the
top of the global market.
But in Tokyo, Sony shed more than four percent and Sharp was off 2.5
percent, while Taiwanese chip giant TSMC shed 1.7 percent.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Pound suffers again –
“As trade wars hurt demand in the US and China, Asian electronics
manufacturers will feel considerable pain, in our view,” Tieying Ma, an
economist at DBS Group, said.
After an initial sell-off, Shanghai’s composite index ended more than one
percent higher, with some observers concurring with Huawei boss Ren Zhengfei
that the firm could absorb the impact of the ban.
“The global telecom supply chain can still work perfectly without the US
suppliers,” said Sun Jianbo, president of China Vision Capital Management in
Beijing.
“China and US are unlikely to allow the worst-case scenario, which
involves putting up trade barriers on all fronts, as it will mean great
losses for both parties. So the worst possible case may have been priced”
into markets.
Sydney rose 0.4 percent, Seoul added 0.3 percent and Taipei was 0.7
percent higher, with Manila, Mumbai, Bangkok and Jakarta all in positive
territory.
But Tokyo ended down 0.1 percent, Hong Kong dropped 0.5 percent and
Wellington closed off 0.2 percent.
In early trade London rose 0.3 percent, Paris added 0.2 percent and
Frankfurt put on 0.6 percent.
“The US-China trade war is in danger of assuming Brexit-like
characteristics — long and drawn out with a series of false dawns, but with
no discernible progress made after a lot of emotional noise,” said OANDA
senior market analyst Jeffrey Halley.
On currency markets the pound fell again and remains lodged around four-
month lows against the dollar as Prime Minister Theresa May struggles to get
opposition Labour backing for her Brexit deal, meaning it is likely to fail
on her fourth attempt to pass it through parliament next month.
There is growing concern May will step down if she loses again, leaving
the path open for a hardliner who is keen for a no-deal divorce, which many
experts say will be economically destructive.
Australia’s dollar sank 0.6 percent against the greenback after central
bank officials hinted at an interest rate cut to record lows when it holds
its policy meeting next month.
Oil prices rose after major producers said supplies were sufficient and
stockpiles still rising, but gains were capped by the China-US tensions.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: DOWN 0.1 percent at 21,272.45 (close)
Hong Kong – Hang Seng: DOWN 0.5 percent at 27,657.24 (close)
Shanghai – Composite: UP 1.2 percent at 2,905.97 (close)
London – FTSE 100: UP 0.3 percent at 7,335.66
Pound/dollar: DOWN at $1.26.95 from $1.2725 at 2050 GMT
Euro/dollar: DOWN at $1.1156 from $1.1165
Dollar/yen: UP at 110.15 yen from 110.04 yen
Oil – West Texas Intermediate: UP 23 cents at $63.33 per barrel
Oil – Brent Crude: UP 13 cents at $72.10 per barrel
New York – Dow: DOWN 0.3 percent at 25,679.90 (close)
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