Asian markets mostly down, Shanghai cheered by tax cuts plan

06-Mar-2019 Intellasia | AFP | 6:00 AM Print This Post

Most Asian markets retreated Tuesday as investors awaited fresh developments in the China-US trade talks, though Shanghai ended sharply higher as China unveiled massive tax cuts to support the stuttering economy.

Wall Street provided a negative lead as optimism that the world’s top two economies are heading for a tariffs deal was replaced by a need for clarity on any agreement.

Shares have enjoyed a blockbuster start to the year so far, but “trade optimism could only take the stock market so far”, said OANDA senior market analyst Alfonso Esparza.

“High-level talks between the two largest economies have been ongoing and although they appear close to bearing fruit, the fact remains that the optimism has already been priced in,” he added. “Details on the agreement will be needed to unlock gains.”

Tokyo ended 0.4 percent lower, Sydney eased 0.3 percent, Singapore and Seoul were each 0.5 percent off and Taipei dropped 0.4 percent. Manila and Bangkok were also down.

But Shanghai jumped 0.9 percent while Hong Kong inched up after China announced hundreds of billions of dollars worth of tax cuts for firms to stimulate the economy.

Beijing will also increase spending, with the targeted fiscal deficit set to increase to 2.8 percent of GDP, from 2.6 percent last year, while the National People’s Congress is expected to pass laws next week regulating foreign investment in a move that could help ease US trade tensions.

– ‘Tough struggle’ -

However, it did reveal a target of 6.0-6.5 percent growth for this yearbelow the last year’s final 6.6 percentwhich was the slowest for three decades, as the leadership struggles to address a mounting debt crisis as well as the trade row.

In a speech at the open of China’s annual rubber-stamp parliament, Premier Li Keqiang warned the country “will face a graver and more complicated environment as well as risks and challenges, foreseeable and otherwise, that are greater in number and size”.

“We must be fully prepared for a tough struggle.”

However, Tai Hui, Asia-Pacific chief market strategist at JP Morgan Asset Management, said the latest target indicated the leadership had learned from the past.

It “reflects top officials’ maturity in accepting that China needs to stabilise growth in a sustainable manner, instead of a rush of liquidity to the economy, as we saw in previous downturns”, he said.

“They need to strike a balance between boosting economic activity and not restart another debt-fuelled boom. It would be unrealistic to expect 2019 to be stronger than 2018 considering global headwinds and some structural challenges in the Chinese economy.”

Shares in Mumbai rose slightly while the rupee also made slight gains despite news that the US had cancelled its preferential trade status, saying it had failed to allow required market access.

However, New Delhi said the impact on its exports to the world’s biggest economy would be limited.

In early trade London rose 0.1 percent, Paris was flat and Frankfurt dipped 0.2 percent.

– Key figures around 0820 GMT -

TokyoNikkei 225: DOWN 0.4 percent at 21,726.28 (close)

Hong KongHang Seng: FLAT at 28,961.60 (close)

ShanghaiComposite: UP 0.9 percent at 3,054.25 (close)

LondonFTSE 100: UP 0.1 percent at 7,140.51

Dollar/yen: UP at 111.94 yen from 111.72 yen

euro/dollar: DOWN at $1.1320 from $1.1342 at 2140 GMT

Pound/dollar: DOWN at $1.3174 from $1.3179

OilWest Texas Intermediate: DOWN 27 cents at $56.32 per barrel

OilBrent Crude: DOWN 28 cents at $65.39 per barrel

New YorkDow: DOWN 0.8 percent at 25,819.65 (close)–finance.html


Category: FinanceAsia

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