Market Close May 21

Asia defensive on US-China altercation 

US proposes bill targeting Chinese companies; Credit markets firm as new issues get strong responses; Eyes on Beijing ahead of NPC  

Asia defensive on US-China altercation 
Moves in the US Senate that could see some Chinese companies delisted from American exchanges has hammered market sentiment. File pic by AFP.

Hong Kong: The intensifying war of words rattled financial markets as US President Donald Trump’s tweets and a US Senate bill that could delist some Chinese companies from American exchanges, hammered sentiment.

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. If and when it becomes law, 165 Chinese companies listed on US stock exchanges — including Alibaba Group Holding, Baidu, and JD.com — could be at risk of delisting, according to media reports.

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 back: “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 closed on a weak note with Japan’s Nikkei 225 down 0.21%, Australia’s S&P ASX 200 retreating 0.41% and Hong Kong’s Hang Seng benchmark down 0.49%. Mainland China’s CSI 300 index fell 0.54% on the eve of the China’s annual parliamentary gathering, which is expected to announce a lower growth target and greater fiscal support for the world’s second-largest economy, with an eye on stabilising employment.

US 10-year treasuries rose with yields down a basis point at 0.66% and WTI crude rose 1.2%.

Credit markets were firm as yield hungry investors continued to switch to investment grade bonds. The Asia IG index tightened 3 basis point to 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 8-10 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 followed Henderson Land’s pricing of a 5-year bond in a $300-million raising.

Also on Asia Times Financial:

Controlling the epidemic, spurring the economy and creating jobs 

Apple, Google launch contact tracing platform 

China slams US for 'dangerous' message to Taiwan's leader

Foreign Exchange: Alibaba US listing at risk? Yuan says maybe

Asia Stocks

· Japan’s Nikkei 225 eases 0.21%

· Australia’s S&P ASX 200 retreats 0.41% 

· Hong Kong’s Hang Seng index falls 0.49%

· China’s CSI300 slips 0.54%

· The MSCI Asia Pacific index drops 0.67%.

Stock of the day 

Wuxi Biologics topped the turnover table on the Hong Kong Exchange as the company announced a block deal to place 4.6% of shares in the company to parties not connected with the drugmaker. Morgan Stanley is the placing agent.