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ASIA-MARKETS-UPDATE
Hong Kong leads way again as Asia markets suffer fresh losses
HONG KONG, June 13, 2019 (BSS/AFP) – Asian markets fell Thursday with Hong
Kong suffering a second straight day of losses as investors fret over the
impact of protests in the city and plans to introduce a controversial law
allowing extradition to China.
Uncertainty over the China-US trade saga and soft inflation data out of
Washington added to the selling, though oil prices bounced from five-month
lows after a report of an incident involving a tanker in the Gulf of Oman.
Hong Kong’s Hang Seng Index led losses after Wednesday’s demonstrations
against a planned extradition law that protesters fear will entangle people
in China’s courts and hammer the city’s reputation as an international
business hub.
While the protests have subsided for now the market was down 0.8 percent
in the afternoon, extending the previous day’s 1.7 percent loss.
And with Beijing backing the law, observers warned the issue could have a
detrimental effect on the mainland.
“Beijing’s push for this extradition bill could prove costly as investors
and businesses value Hong Kong’s autonomy,” said OANDA senior market analyst
Edward Moya.
“Uncertainty with Hong Kong’s autonomy will dampen business prospects and
put a further strain on Chinese growth. If the US and Europe become involved
it could complicate relations and future trade deals.”
Hong Kong has also come under pressure from the international community,
with the European Union saying the proposed law had “potentially far-reaching
consequences for Hong Kong and its people, for EU and foreign citizens, as
well as for business confidence in Hong Kong”.
The amount banks charge each other to borrow cash — known as the Hong
Kong Interbank Borrowing Rate (Hibor) — extended its recent rise to a fresh
11-year high Thursday as cash is sucked out of the financial system. The
gains saw the local dollar hit a six-month high.
While the withdrawals are expected at this time of year for various
seasonal reasons as well as preparations for IPOs, analysts said the protests
were also having some effect.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Crude bounces –
Most other regional markets were also in the red, with recent optimism
that the Federal Reserve will cut interest rates soon — helped by soft US
inflation data — unable to soothe investor angst.
Tokyo ended 0.5 percent lower, Singapore fell 0.2 percent and Taipei fell
0.5 percent. Sydney, and Manila were also lower, though Shanghai and
Wellington ended up after late rebounds.
Energy firms fell but pared early losses as oil prices rallied about three
percent on news that a port in key producer the United Arab Emirates had
received a distress signal from a tanker, Bloomberg News reported. The news
comes after the sabotage of four ships in the region last month that
heightened tensions there.
“We know that geopolitical tensions in the region are worsening and raise
supply-side concerns in terms of short-term outages etcetera,” said Neil
Wilson, chief market analyst at Markets.com. “But with OPEC already curbing
output and US production at a record high the market is far less susceptible
to a shock.”
The report provided a much needed bounce to crude prices after they tanked
Wednesday on data showing a surge on US inventories, which exacerbated
worries about the China-US trade war.
The jump of more than two million barrels of crude — compared with an
expected drop of one million — fuelled worries about demand in the world’s
top economy and sent both main contracts to levels not seen since January.
Hopes that OPEC and other key producers led by Russia will reach an
agreement to extend output cuts beyond June were also giving support to
prices, although no date has been set for their meeting due later this month.
“While the group has still to settle on a date for their upcoming bi-
annual meeting, members continue to promote the idea of further cuts. UAE
said yesterday that the group is close to agreeing to extend cuts,” Moya
said.
In early trade London’s FTSE index and Frankfurt’s DAX were each down 0.2
percent, while Paris slipped 0.3 percent.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: DOWN 0.5 percent at 21,032.00 (close)
Hong Kong – Hang Seng: DOWN 0.8 percent at 27082.43
Shanghai – Composite: UP 0.1 percent at 2,910.74 (close)
London – FTSE 100: DOWN 0.2 percent at 7,355.49
Euro/dollar: UP at $1.1299 from $1.1288 at 2100 GMT
Pound/dollar: DOWN at $1.2683 from $1.2687
Dollar/yen: DOWN at 108.30 yen from 108.51 yen
Oil – West Texas Intermediate: UP $1.44 at $52.48 per barrel
Oil – Brent North Sea: DOWN $1.83 at $61.80 per barrel
New York – Dow: DOWN 0.2 percent at 26,004.83 (close)
BSS/AFP/HR/1450