Asian stocks slump to 14-mth low on China woes, Trump’s trade threats

SYDNEY: A sell- off in Chinese shares pulled Asian equities to a 14-month trough on Monday as investors braced for a potentially damaging escalation in the SinoUS tariff row after US President Donald Trump raised the stakes in the dispute with Beijing.

MSCI’s broadest index of AsiaPacific shares outside Japan skidded 0.9 per cent to the lowest since July 2017, extending losses from last week when it dropped 3.5 per cent for its worst weekly showing since mid-March.

In Europe, however, spreadbetters are pointing to a slightly more positive start with the focus on Sweden’s election results with the country headed for a hung parliament.

Futures for Eurostoxx 50, Germany’s Dax and London’s FTSE were modestly higher while E-Minis for the S& P 500 were a bit stronger too.

Asian investors were jittery after Trump said on Friday he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another US$ 267 billion of goods in addition to the US$ 200 billion already facing the risk of duties.

Beijing has warned of retaliation if Washington launches any new measures, but it is running out of room to match them dollar-fordollar, raising concerns it could resort to other measures such as weakening the yuan or taking action against US companies in China.

Chinese shares were battered with the blue- chip index off 1.4 per cent while Shanghai’s SSE Composite stumbled 1.2 per cent.

Hong Kong’s Hang Seng index slipped 1.3 per cent.

Japan’s Nikkei, which had opened lower, ended 0.3 per cent higher after revised secondquarter gross domestic product data showed the world’s thirdbiggest economy grew at its fastest pace since 2016.

Trump, who is challenging China, Mexico, Canada and the European Union on trade issues, has now expressed displeasure about his country’s large trade deficit with Japan.

Investors are also on the edge about any contagion risks from turmoil in some emerging markets ( EM) including Argentina and Turkey whose currencies have been routed recently.

Some Asian economies too are vulnerable, Nomura analysts said in a lengthy report with many countries burdened with high private debt.

They also noted a ‘concentration risk’ from some of the world’s largest funds’ heavy investments in EM assets.

The Indian rupee hit a record low of 72.50 per dollar on while Indonesia’s rupiah – the region’s second worst performer this year – weakened 0.4 per cent, hovering near an all time trough. — Reuters