Sun, Sep 16, 2018 - Page 14 News List

Asian shares rally on trade talk moves

SHAKY GROUND:Analysts said that Steven Mnuchin has little credibility with Chinese policymakers, after his invitation to meet with Beijing officials was scuppered by Trump


Asian shares rose on Friday as the US and China looked set to launch a new round of trade talks amid an escalating tariff row.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2 percent, putting it on track for its best performance in more than two weeks.

Australian shares ended up 0.7 percent on Friday, with the S&P/ASX200 Index rising to 6,165.3, a 0.4 percent increase for the week.

Seoul’s KOSPI was up 1.4 percent higher and Hong Kong’s Hang Seng climbed 0.9 percent on Friday.

For the week, KOSPI rose 1.6 percent to 2,318.25 and the Hang Seng rose 1.2 percent to 27,286.41.

Japan’s Nikkei index ended 1.2 percent higher on Friday and rose 3.5 percent for the week to 23,094.67, while TOPIX increased 2.6 percent for the week to 1,728.61.

The weighted index on the Taiwan Stock Exchange ended up 140.91 points, or 1.31 percent, at 10,868.14, after moving between 10,770.47 and 10,882.04, on turnover of NT$126.36 billion (US$4.1 billion). The TAIEX rose 0.19 percent from last week’s 10,846.99.

However, Chinese shares struggled, with the benchmark Shanghai Composite index falling less than 0.1 percent, having spent much of the day wavering between gains and losses.

Investors in China were assessing new data showing forecast-topping industrial output and retail sales data for August alongside falling real-estate investment. There were underlying concerns that a cooling property market could increase risks for the economic outlook as the trade environment worsens.

China’s blue-chip CSI300 index turned around from earlier losses to gain 0.2 percent.

“What the market wants is some degree of certainty,” said Jim McCafferty, head of Equity Research, Asia ex-Japan, at Nomura.

“I think everyone knows that the trade deal might not be as optimistic as it might have been in ... June or July, and it might be negative for many Chinese companies. However, the fact that there is no certainty there is one reason that investors are staying on the sidelines,” McCafferty said.

News of a possible new round of talks between Washington and Beijing comes even as the trade war between the world’s two largest economies looks set to escalate.

Chinese officials welcomed an invitation from US Secretary of the Treasury Steven Mnuchin for new talks. However, US President Donald Trump tempered market expectations, tweeting on Thursday that the US is “under no pressure to make a deal with China.”

The Trump administration is readying a final list of US$200 billion in Chinese imports on which it plans to levy tariffs in the coming days, a move that many fear would mark a severe escalation in the trade war and put a significant dent in global growth.

“The news on Wednesday that US officials had invited China to restart trade talks suggests that the announcement of tariffs on US$200bn of Chinese imports might be delayed, but we think the chance that fresh talks will defuse trade tensions is low,” Capital Economics analysts said in a note.

The analysts noted that Mnuchin had brokered a deal with China in May that was scuppered days later by Trump.

“As a result, he has little credibility with Chinese policymakers,” they said.

On Friday, the state-run English-language China Daily newspaper said in an editorial that China would not “surrender” to US demands, and that Beijing “will not hesitate to take countermeasures against US tariffs to safeguard China’s interests.”

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