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Equities

Nikkei Asia300 slides on US-China trade war fears

Gauges for China and South Korea shed more than 3%

MUMBAI (NewsRise) -- Asian stocks outside of Japan tumbled on Friday as U.S. and China trade tensions prompted a selloff in risk assets and boosted safe haven assets.

The Nikkei Asia300 Index dropped 2.3% to 1,419.49. Heavyweight Tencent Holdings fell 4.4% to HK$420.00 in Hong Kong after South African media and e-commerce group Naspers, its largest shareholder, said it is selling about 190 million shares in the company at HK$405 apiece. Naspers, which now owns a roughly 31.2% stake in Tencent after the 2% sell-down, said it will not reduce its shareholding in the company further for at least another three years.

There was carnage across global equity markets after the world's two largest economies moved toward imposing import tariffs on each other. U.S. President Donald Trump took a step towards implementing tariffs on $60 billion worth of Chinese goods, and Beijing, in an apparent retaliation, proposed tariffs of its own on U.S. imports. Increasing probability of a trade between the two major economies prompted investors to seek the safety of U.S. Treasuries and the yen, and dump equities.

U.S. indexes suffered their biggest drop in six weeks overnight, while Japan's benchmark equity index the Nikkei Stock Average dropped by almost 1,000 points Friday and European stocks were at three-week lows. The yen rose to its highest level in more than a year on Friday, while yield on 10-year U.S. Treasuries tumbled by the most in over six months on Thursday.

"For the short term, it looks like trade frictions will keep markets jittery as there is a possibility that we are at the beginning of a long-drawn out trade dispute," said Jingyi Pan, market strategist at IG Asia.

Looking ahead, Capital Economics said "the key uncertainty is whether President Trump sees the tariffs as an end in themselves, or whether they are followed by a further escalation when, as seems likely, they fail to narrow the trade imbalance significantly."

Hong Kong-listed Galaxy Entertainment Group closed 1% lower. The Macau-based casino operator announced that it will buy 5.3 million shares of U.S.-listed Wynn Resorts at $175 apiece. Shares of Wynn Resorts closed 1.9% lower at $175.54 in Thursday U.S. trading.

The Hong Kong-listed shares of Anhui Conch Cement declined 2.4% despite reporting a better-than-expected 86% rise in net profit for year ended Dec. 31. China Life Insurance closed 1.6% lower after reporting an in-line 68% increase in net profit for the same period. PetroChina fell 2.9%, trimming most of its weekly advance. The energy producer reported a near tripling of its annual net profit. CITIC Securities, a member of the CITIC conglomerate, declined 3.4% after saying it expects commission and fee income to drop in 2018 amid fierce competition. For the year ended 31 Dec, it reported a 10.3% net profit increase.

In country indexes complied by Nikkei, China dropped 3.1%, South Korea lost 3.5% and Hong Kong dropped 1.6%. Taiwan fell 2% and India shed 0.9%.

The Nikkei Asia300 ASEAN Index of Southeast Asian companies ended 1.1% lower.

-- Nimesh Vora

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