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ASIA-MARKETS-UPDATE
Asia markets sink on trade fears as Congress passes HK rights bill
HONG KONG, Nov 21, 2019 (BSS/AFP) – Hong Kong led losses as Asian markets
tanked on Thursday after US lawmakers passed a bill supporting the city’s
civil rights, sparking fears it could derail delicate China-US trade talks.
Investors already nervous about the progress of negotiations were sent
running for the hills after both houses of Congress overwhelmingly agreed to
the bill and sent it to be signed by President Donald Trump.
The Hong Kong Human Rights and Democracy Act requires the president to
annually review the city’s favourable trade status and threatens to revoke it
if the semi-autonomous territory’s freedoms are quashed.
They also passed legislation banning sales of tear gas, rubber bullets and
other equipment used by Hong Kong security forces in putting down the
protests, which are now in their sixth month.
Beijing said Thursday it “strongly” condemned the move and was ready to
take measures to “resolutely fight back”.
Officials had already summoned a top US diplomat on Wednesday over the
Senate’s passing of the bill and warned of “strong” countermeasures should it
be signed into law.
The White House has not threatened to veto the measure and Trump is
expected to sign it, according to a source familiar with the matter.
The move comes just as US and Chinese negotiators try to put the finishing
touches to a much-vaunted mini trade deal that is seen as the first part of a
wider agreement. Markets had been rallying in recent weeks on optimism it
will be signed off soon.
“China’s strong response to the Hong Kong bill news is something to be
taken seriously in terms of how it impacts on the trade discussions,” said
National Australia Bank’s Ray Attrill.
“Who knows where we land here? All we’d say for now is that we have a good
idea where markets will reprice if and when a phase-one deal gets done and
depending on whether it includes some tariff rollbacks.
“But what happens between now and then is frankly anyone’s guess.”
MORE/HR/1556
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Relations ‘permanently injured’ –
Hong Kong shares tanked more than two percent at one point before clawing
back slightly to sit 1.6 percent down by the close. But there remains a lot
of nervousness that the key trade and financial hub could take a heavy hit if
its status is revoked, leaving it exposed to similar US tariffs to the
mainland.
Tokyo ended 0.5 percent lower and Shanghai finished 0.3 percent off.
Sydney, Singapore, Seoul, Jakarta and Taipei also retreated but were off
early lows. Manila shed more than one percent.
In early trade, London fell 0.5 percent, Frankfurt shed 0.6 percent and
Paris retreated 0.7 percent.
“It is clear that this pushes the Chinese negotiation and makes it
difficult. I think that’s one thing we can depend on,” David Kotok at
Cumberland Advisors told Bloomberg TV.
“I don’t see a trade deal coming. I think anything we get is minor, small,
and a long-term relationship between the US and China has been permanently
injured.”
Adding to the downbeat mood was a Reuters report saying the partial trade
deal may not be completed before the end of the year.
And Trump said that while talks were ongoing, he felt no pressure to
strike a bargain, saying: “I don’t think they’ve stepped up.”
That came a day after he warned he could raise tariffs further on China if
the deal is not finalised.
The uncertainty caused a flight to safe-haven investments, with the yen —
a go-to unit in times of turmoil — rising against the dollar, while the
greenback jumped across the board versus high-yielding currencies such as the
South Korean won and Mexican peso.
Oil prices dipped on the trade worries, a day after surging on data
showing a smaller-than-forecast rise in US stockpiles. WTI piled on 3.4
percent and Brent climbed 2.4 percent Wednesday.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: DOWN 0.5 percent at 23,038.58 (close)
Hong Kong – Hang Seng: DOWN 1.6 percent at 26,466.88 (close)
Shanghai – Composite: DOWN 0.3 percent at 2,903.64 (close)
London – FTSE 100: DOWN 0.5 percent at 7,225.65
Euro/dollar: UP at $1.1073 from $1.1072 at 2200 GMT
Pound/dollar: UP at $1.2924 from $1.2922
Euro/pound: DOWN at 85.66 pence from 85.67 pence
Dollar/yen: DOWN at 108.55 yen from 108.62 yen
West Texas Intermediate: DOWN five cents at $56.96 per barrel
Brent North Sea crude: DOWN eight cents at $62.32 per barrel
New York – Dow: DOWN 0.4 percent at 27,821.09 (close)
BSS/AFP/HR/1600