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Markets nervous amid US-China verbal duel

Asian stock markets
Most Asian markets tracked Wall Street down on Wednesday. Reuters file photo.

(ATF) Investors are jittery in Asian trade after the US Senate passed a bill that could delist some Chinese companies from American exchanges even as the two countries continued their verbal assault on each other. 

The US legislation, seeks a bar on companies from listing securities on US exchanges if it has not complied with the US accounting board’s audits and also require listed companies to disclose if they are owned or controlled by a foreign government.

The Holding Foreign Companies Accountable Act has to be passed by the House of Representatives next.

The war of words between the world’s two biggest economies is escalating with China denouncing US Secretary of State Mike Pompeo, who had described Taiwanese President Tsai Ing-Wen as “an inspiration to the region and the world”.

China’s foreign ministry spokesman said “any connivance or support for Taiwanese independence is doomed to failure” and that Taiwan’s independence was a “road that leads to death”.

US President Donald Trump tweeted “Spokesman speaks stupidly on behalf of China, trying desperately to deflect the pain and carnage that their country spread throughout the world. Its disinformation and propaganda attack on the United States and Europe is a disgrace…It all comes from the top. They could have easily stopped the plague, but they didn’t!”

Asian markets subdued

Asian markets are subdued and indexes are broadly lower with Japan’s Nikkei 225 is off 0.1% and Australia’s S&P ASX 200 retreated 0.4%. Hong Kong’s Hang Seng benchmark is marginally lower and mainland China’s CSI 300 index is 0.2% higher. US 10-year treasuries rose with yields down 2 basis points to 0.66% and WTI crude rose 0.6%.

Overnight, On Wall Street, the S&P 500 gained 1.67%, the Dow Jones Industrial Average added 1.52% and the Nasdaq Composite advanced 2.08% as a tech rally boosted sentiment.

Credit markets extended gains as yield hungry investors continued to switch to investment grade bonds. The Asia IG index is 4 basis point tighter at 105/106 with sovereign names tighter by 2-4 basis points among the investment grade names. High yielding sovereigns saw their contracts move in by 5-10 basis points.

Primary markets remain active with Hotel Properties issuing a price guidance for 5-year SGD denominated bonds Reg S format  and Bank of East Asia issuing guidance for a tier- 2 dollar-denominated bond offering. This follows Henderson Land’s pricing of a 5-year bond in a $300 million raising

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Umesh Desai

Umesh Desai is the Executive Editor at Asia Financial. Prior to this he spent over two decades with Reuters News as Asia Pacific Chief Correspondent in Hong Kong and Bureau Chief in Bombay. Before becoming a journalist Umesh was a credit ratings analyst with Moody's arm in India - ICRA. A chartered accountant by training, Umesh began his career as an equity analyst. His Twitter handle is @umesh_desai


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