MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.05 per cent while China’s Shanghai stock index slipped 0.2 per cent, barely responding to any of the concerns around the latest Sino-US tensions that caused the Nasdaq index to fall more than 1 per cent on Friday.
Risk assets took a hit in US trade on Friday following news the Trump administration is considering radical new financial pressure tactics on Beijing, including the possibility of delisting Chinese companies from US stock exchanges.
The report knocked Chinese shares listed on US exchanges, with Alibaba Group Holding falling 5.15 per cent and JD.com 5.95 per cent on Friday.
Worries such an escalation would hurt Japan the most however weighed on the Nikkei, which shed 0.45 per cent. US stock futures gained 0.44 per cent, paring most of Friday’s 0.53 per cent fall in the index.
Trading in Chinese markets was quiet ahead of a long break. Chinese share markets will trade only today this week ahead of the country’s National Day holiday, which runs until October 7.
There were mixed signals from China’s manufacturing surveys today, which showed sustained weakness in exports and surprising improvement in domestic consumption indicators, and a Chinese central bank statement briefly hinting at plans for more stimulative policies.
China’s yuan was little moved at 7.1192 yuan per dollar, while the offshore yuan rallied a bit from Friday’s three-week low of 7.1520.
The delisting of Chinese companies from US stock exchanges was part of a broader effort to limit US investment in Chinese companies, two sources briefed on the matter told Reuters.
A US Treasury official said the United States does not currently plan to stop Chinese companies from listing on US exchanges, Bloomberg reported on Saturday.
“While China runs a current account surplus and is a net creditor nation, Chinese companies are net debtors and rely on foreign capital,” Koji Fukaya, president of Office Fukaya Consulting.
“Washington seems to be trying to limit Chinese companies’ activities by putting pressure on their funding,” he said.
Still, with trade talks between the United States and China expected to be held October 10-11, many market players are hoping such drastic measures on capital markets will be avoided.
“At this point, markets will have to wait and see. Of course we need to be guarded against more crazy headlines, but this week could be a bit calmer given holidays in China. Economic data will likely be the main driver for markets,” said Kyosuke Suzuki, director of forex at Societe Generale.
US data on Friday showed consumer spending barely rose in August and business investment remained weak, suggesting the American economy was losing momentum as the trade dispute drags on.
Industrial output in Japan and South Korea, released this morning, dropped more than expected, underscoring the headwinds from the trade war.
Investors are also keeping a wary eye on US politics.
US House Speaker Nancy Pelosi said public opinion is now on the side of an impeachment inquiry against Trump following the release of new information about his conversations with Ukrainian President Volodymyr Zelenskiy.
Major currencies were little changed in early trade.
The yen traded flat at ¥107.94 (RM4.19).
The euro hovered around US$1.0932 (RM4.18), having sunk to a 28-month low of US$1.0904 on Friday as concerns about tepid growth in Europe weighed on the common currency.
Sterling traded at US$1.2285, not far from Friday’s low of US$1.2270, its lowest since September 9.
Boris Johnson said on Sunday he would not quit as Britain’s prime minister even if he fails to secure a deal to leave the European Union, insisting only his Conservative government can deliver Brexit on October 31.
Oil prices slightly rebounded after last week’s slide.
Saudi Arabia’s crown prince warned in an interview with CBS programme 60 Minutes aired yesterday that crude prices could spike to “unimaginably high numbers” if the world does not come together to deter Iran.
But Crown Prince Mohammed bin Salman said he would prefer a political solution to a military one, adding the September 14 attacks on the kingdom’s oil facilities were an act of war by Iran.
Brent crude futures rose 0.05 per cent to US$6.94 a barrel while US West Texas Intermediate (WTI) crude gained 0.25 per cent to US$56.05 per barrel. — Reuters
Source: The Malay Mail Online