Asian Stock Markets: Investors reassessed the impact of the U.S.-China trade spat on the country’s economy and its markets.


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The Shanghai Composite rose 0.9% after earlier falling as much as 1.8%. The tech-heavy Shenzhen market was 0.2% higher after earlier tumbling as much as 3.1%. The moves came after both indexes on Thursday logged their worst one-day drops since February 2016. Some investors were encouraged by trade data released Friday that showed better-than-expected growth in Chinese exports. That helped ease concerns about the damage to China’s economy from U.S. tariffs and other trade friction.

“The strong data definitely was a shot in the arm for a badly beaten-up market,” said Zhang Yanbing, senior analyst at Zheshang Securities Co. Still, China remains one of the world’s worst-performing equity markets this year, with Shanghai down 21% and Shenzhen off 32%. “After yesterday’s steep, panicky selloff, investors have turned extremely pessimistic and it’s hard to see any major upside in the foreseeable future,” said Jacky Zhang, an analyst at BOC International.

Global market volatility aside, there are rising concerns about a lack of clear economic policy direction from Beijing to counter slowing growth, Mr. Zhang said. “The market would like to see more potent measures such as deeper tax cuts and other reforms but they remain absent,” he added. Other markets also had a reprieve. Indexes in South Korea and Hong Kong gained 1.5% and 2.1% Friday, respectively, while Japan’s Nikkei 225 index rose 0.5%. Taiwan’s Taiex gained 2.4%, recovering some after falling 6.3% a day earlier, its worst one-day slide since January 2008.

The moves followed another volatile trading session in the U.S., where the S&P 500 tumbled 2.1%, capping a two-day selloff as investors refocused on the Federal Reserve’s interest-rate increases and rising bond yields, coupled with evidence of slowing global growth and escalating trade tensions.

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“The U.S. expansion is getting older and the Fed is ever tighter,” said Steven Wieting, managing director and global chief investment strategist at Citi Private Bank. “This impacts every global asset class to some degree and suggests a gradual shift to a more defensive asset allocation over time.”

Chinese tech companies have been some of the market’s biggest victims this year, finding themselves hurt by two forces: a broad selloff in internet companies, and an escalating trade spat between Beijing and Washington that has an outsize impact on China’s biggest tech suppliers. “Investors are currently most concerned about the protracted China-U.S. trade dispute, which seems to be expanding beyond trade itself,” strategists at Goldman Sachs wrote in a note to clients.

Shares in Chinese smartphone giant Xiaomi rose on Friday.

One standout gainer Friday was Tencent Holdings Ltd. , the Chinese internet giant that has been clobbered in recent days. Shares jumped 8%, snapping a record 10-day losing streak. Hong Kong-listed Tencent has lost more than a quarter of its value this year; more than $250 billion had been wiped off its market value from its record high in January through Thursday.

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Shares in Chinese smartphone giant Xiaomi Corp. and smartphone camera lens-maker Sunny Optical Technology Co. also picked up, rising 3.2% and 10.7%, respectively. Hong Kong-listed shares of ZTE Corp. , a top seller of smartphones to the U.S. for years, rose, as did Lenovo Group Ltd. , a Chinese maker of PCs and servers.

Meanwhile, the yuan rose against the dollar in China’s domestic market, following news that the White House has decided to move ahead with plans for President Trump to meet with Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires next month. One dollar bought 6.9040 yuan, down from 6.9268 Thursday.

The yuan’s rebound came despite a surprise move by China’s central bank to set the daily reference rate weaker against the greenback before trading began Friday. The People’s Bank of China set the so-called dollar-yuan fix at 6.9120 versus 6.9098 Thursday. A weaker yuan helps China’s exports.

Elsewhere, stocks in some of the Asia-Pacific region’s smaller markets were higher on Friday. After its worst day in nearly a decade, New Zealand’s NZX-50 index rose 1.4%.

Categories: Stock Markets

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7 replies


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