Emerging equities yesterday turned negative on the year, with Asian bourses suffering hefty falls and currencies under pressure as tit-for-tat tariff actions between Washington and Beijing fuelled fears that a trade war could damage the global economy.
US President Donald Trump’s administration on Tuesday revealed plans to slap a 25 percent tariff on US$50 billion worth of annual imports from China, including technology, transport and medical products.
Beijing was quick to retaliate yesterday, announcing a 25 percent levy on 106 US goods such as soybeans, chemicals, cars, some types of aircraft and corn products.
MSCI’s emerging stocks benchmark fell 1.5 percent to a 50-day low, turning negative on the year.
Asian bourses tumbled, with heavyweight Hong Kong down 2.2 percent to touch multi-week lows, and Malaysia and South Korea not far behind.
China’s main market, the Shanghai Composite Index, closed down 0.15 percent to end the day at 3,131.84 points, erasing some healthy gains earlier in the session.
MSCI’s broadest index of Asia-Pacific shares outside Japan had spent most of its session dithering either side of flat before ending 0.3 percent lower.
However, the rekindled fears of protectionism also sapped risk appetite across wider emerging markets, with bourses in Moscow, Turkey and central Europe also trading in the red.
South African stocks tumbled more than 3 percent, also suffering from a price target cut.
“China is a hub where products from the rest of Asia are assembled and re-exported to the Western world, especially the US,” said Inan Demir, senior emerging economist at Nomura International Ltd. “If Chinese-origin products are subject to tariffs, the likelihood is that other countries will have less room to export to China, because the final destination of those products is the US and also because Chinese growth will slow down.”
Currencies also felt the heat, broadly weakening against the softer US dollar.
The Chinese yuan eased 0.4 percent, suffering its biggest daily fall in two weeks, while the Mexican peso and Russian ruble matching those falls.
The Turkish lira weakened 0.6 percent against the US dollar, crashing once again through the 4-to-the-dollar threshold while tumbling nearly 1 percent against the euro.
Investor worries over Turkey’s monetary policy and high inflation contributed to the weakness.
“Given the market’s concern about over-heating in the Turkish economy, a pronounced reluctance to implement counter-cyclical measures and [to] show a willingness to reduce interest rates further and strengthen credit growth, [this is] adding to market concerns about Turkey’s imbalances,” Demir said.
From the customer’s perspective, car rental is a straightforward business. The only uncertainty is whether the hire company will charge you for the scratch they discover when you hand back the vehicle. Hertz Global Holdings Inc’s bankruptcy protection filing on Friday last week was a reminder that today even the simplest business models are underpinned by a lot more financial complexity than meets the eye. The proximate cause of Hertz’s demise was of course the sudden collapse in bookings caused by COVID-19 travel restrictions. The company’s monthly revenue last month fell 73 percent year-on-year, a shortfall that even the most resilient
Uber Technologies Inc, Lyft Inc and Airbnb Inc have slashed thousands of jobs. Salesforce.com Inc and Visa Inc are letting employees work remotely for months; Twitter Inc and Square Inc are allowing them to do so for good. For the companies’ hometown of San Francisco, the moves are early signs of a dire blow. In a city with a long history of booms, busts and natural calamities, the COVID-19 pandemic has suddenly upended nearly a decade of prosperity. While municipalities across the US are grappling with economic fallout from the virus, San Francisco stands to take a deeper hit given its high
‘ONE-STOP SHOP’: A Miaoli official said that the factory in the Jhunan section of the Hsinchu Science Park would create more than 1,000 jobs and boost prosperity A new high-end IC packaging and testing plant planned by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Miaoli County is expected to start operations in the middle of next year, Miaoli County Commissioner Hsu Yao-chang (徐耀昌) said. Hsu wrote on Facebook that TSMC, the world’s largest pure wafer foundry operator, would invest NT$303.2 billion (US$10.1 billion) to build the plant, the largest-ever single investment in Taiwan. However, TSMC declined to disclose the financial terms of the deal, while a company board meeting on May 12 approved a spending plan worth NT$168.2 billion as part of its investment plans. Construction of the
BULK PURCHASE: The French chain and Hong Kong-based Dairy Farm International reached a deal covering 224 stores, which is expected to be finalized by year’s end Carrefour SA yesterday announced it would acquire Wellcome Taiwan Co (惠康百貨) for 97 million euros (US$108.33 million), and bring all the Wellcome supermarkets (頂好超市) and Jasons Market Place stores nationwide under its banner within 12 months of the deal closing. The France-based hypermarket chain reached an agreement with Hong Kong-based Dairy Farm International Holdings (牛奶國際控股), the pan-Asian retailer that launched Wellcome Taiwan in 1987. The transaction involves 199 Wellcome supermarkets, which have average sales areas of 420m2 and 25 high-end Jasons Market Place stores, which have an average sales area of 820m2, as well as a warehouse in Taoyuan, Carrefour Taiwan (家樂福)