Trade of the Day: Asian stocks and US futures tumble; gold climbs; oil and US Treasuries flat.
Quote of the Day: “I think it’s an overreaction in the markets today. The Chinese will pragmatically work through the issues with Hong Kong. I remember reading recently that many of the protests that China had to deal with Tiananmen square eventually calmed down and many of the people that may have protested at the time ended up making a great deal of money from the subsequent strong performance of Chinese asset markets and economy,“ said Gary Dugan, CEO at Purple Asset Management.
Stock of the day: China Oriental Group climbed in a weak market after the company acquired production capacities close to port which would allow it to reduce transportation costs and relocate existing production from a region subject to more stringent environmental protection measures.
Number of the Day:. 4.3% – DBS forecast for India’s Q3 GDP growth, expected to be released 1200 GMT. This is lower than the market consensus of 4.6% and Q2 growth of 5%.
Tip of the Day: Barclays says the modest move higher in Korean government bond yields could peak in early 2020 as it bets conditions will prompt the BoK to cut the rate once more in Q1 2020, bringing the policy rate to 1.0%.
Asian stocks crumbled and demand for safety surged after China pledged it would take countermeasures and the United States “must bear all consequences” following the passage of the Hong Kong Human Rights and Democracy Act, which Beijing viewed as “foreign interference.” .Market experts said there was unlikely to be a further deterioration in the Hong Kong situation. “Chinese political culture is to take the long view and hence I would be very surprised if there was any more significant intervention in the HK situation,” Gary Dugan, CEO at Purple Asset Management told Asia Times.
MSCI All Country world index outside United States dropped 0.55% and Hong Kong’s Hang Seng benchmark tumbled 2.03% as telecoms, healthcare, insurance and banking suffered the maximum losses. Exchange data showed, 19 of the top 20 stocks by turnover were down on the day with e-commerce giant Alibaba retreating for the first time since it started trading this week.
The stock which had risen 16% since its debut, fell 2.3% on Friday as investors played safe ahead of the weekend awaiting Beijing’s next move following Thursday’s warning. US markets are set to open weak after the Thanksgiving holiday as futures on the S&P 500 Index dropped 0.4% indicating risk aversion.
Earlier in the day, Holger Schmieding, chief economist at Berenberg, said Hong Kong was the biggest geopolitical risk out there for markets. “If the situation in Hong Kong escalates badly, if we get a Chinese heavy-handed military intervention, then it would be nearly impossible for the US to conclude a trade deal with China – even a stage one deal – it would be nearly impossible for the EU to do that, so that would prolong the global industrial downturn which is caused by trade tensions,” he said in an interview with CNBC.
The trade war impact on China will be sought from the NBS manufacturing PMI numbers on Saturday, after these numbers disappointed markets in October and following the shock industrial profits data earlier in the week. China’s factory activity is expected to have contracted for the seventh straight month in November amid sluggish domestic demand a Reuters poll showed. The official Purchasing Managers’ Index (PMI) for November is expected to come in at 49.5, below the 50-point mark that separates expansion from contraction on a monthly basis, it showed. In October the reading was 49.3.