Hong Kong led most Asian markets lower
Wednesday with tech firms in the firing line after China Telecom was banned
from the United States, adding to already fraught tensions between the
superpowers as concerns lingered about inflation.
A strong corporate earnings season has provided some much-needed support
to investors in recent weeks as companies showed resilience in the face of
supply snarls, surging commodity and wage costs, and spiking Covid cases.
But long-running friction between Washington and Beijing continues to
cast a dark shadow over trading floors, with the two sides locked in a stand-
off over a range of issues including Taiwan, national security, technology,
trade and Hong Kong.
On Tuesday, the Federal Communications Commission cancelled the
operating licence of China Telecom’s US unit saying it “raised significant
national security and law enforcement risks”.
The move came after a clampdown by Donald Trump’s White House on other
giants including Huawei and China Mobile.
US-listed Chinese tech firms sank, and their stocks in Hong Kong also
suffered hefty selling, pulling the Hang Seng Index more than one percent
lower.
The Hang Seng Tech Index lost more than three percent, with Tencent,
Alibaba, JD.com and XD Inc among those taking a hit in morning trade.
The move “seems to dampen previous hopes that the US-China relations may
be turning for the better”, said Jun Rong Yeap of IG Asia. It “has raised
some doubts as to whether further escalation may bring back more US scrutiny
on Chinese technology players”.
The rest of Asia was also in the red as a forecast-beating jump in
Australian core inflation added to broad fears about soaring global prices
that are forcing central banks to remove the ultra-loose monetary policies
put in place at the start of the pandemic.
– ‘Downside risks remain’ –
With some countries having already lifted interest rates, the United
Kingdom is expected to follow suit before the year’s end, while the US
Federal Reserve will likely taper its bond-buying programme next month and
hike borrowing costs in mid-2022.
Investors are hoping for clues about the European Central Bank’s plans
when it holds its latest meeting on Thursday.
Tokyo, Shanghai, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta
all dropped, though Singapore rose.
The losses came as traders brushed off another record close for the Dow
and S&P 500 on Wall Street.
However, observers remained upbeat that the global recovery, while
slowing, will continue to favour companies’ bottom line.
“Downside risks to the economy remain but investors are opting to look
beyond these as companies continue to give us plenty of reason to be
optimistic about what lies ahead,” said Craig Erlam of OANDA.
Such “enthusiasm may come and go, creating plenty of two-way action in
the markets”, he added.
Still, Citigroup warned profit growth could be near its peak.
Oil markets dipped but remained at multi-year highs on expectations
about surging demand and concerns over supplies.
Investors are also keeping tabs on the crisis in China’s property sector
with a number of developers struggling to meet their debt obligations, while
industry giant China Evergrande faces a new deadline at the end of the week
to avoid a default.
Authorities called on the firm’s tycoon boss Xu Jiayin to dip into his
own pocket to ease the firm’s financial problems, reports said.
However, with liabilities of more than $300 billion, and his net worth
at less than $8 billion, it is unlikely that would make much of a difference.
Source: Bangladesh Sangbad Sangstha (BSS)