Asian markets plunge as Trump threatens to hike China tariffs
Hong Kong: President Donald Trump sent Asian markets plunging Monday after threatening to hike tariffs on USD 200 billion of Chinese goods at the end of the week in a bid to speed up stuttering trade talks between the economic superpowers.
Shanghai and Hong Kong equities led big losses across the region, with the Chinese yuan also taking a battering after the president threw a spanner into the high-level negotiations, which many observers were expecting to wrap up imminently.
"For 10 months, China has been paying Tariffs to the USA of 25 per cent on 50 Billion Dollars of High Tech, and 10 per cent on 200 Billion Dollars of other goods," Trump tweeted Sunday night. "The 10 per cent will go up to 25 per cent on Friday."
The warning will throw a shadow over the next round of talks, with a delegation from Beijing due in Washington this week, with Bloomberg News reporting the Chinese side are considering their position. The two sides have imposed tariffs on USD 360 billion in two-way trade since last year.
But Trump and his Chinese counterpart Xi Jinping agreed a truce in December, helping fan a surge across world stock markets for the past four months.
"Trump has taken the proverbial sledgehammer to the walnut this morning and the only two words likely to be on the minds of traders and investors this week are 'trade talks'," said OANDA senior market analyst Jeffrey Halley.
In early trade Hong Kong tumbled 2.5 per cent and Shanghai was off more than three percent, with Singapore off 2.8 per cent, Taipei 1.5 per cent off, while Sydney and Wellington were each one per cent down.
Manila and Jakarta were also sharply lower. Tokyo and Seoul were closed for holidays.
"It's making the outcomes more binary, with everybody focused on the Friday deadline," said Joyce Chang, chair of global research at JPMorgan Chase & Co.
"There doesn't seem to be much leeway now to much go past that. It's going to mean that investors will be very focused on the trade issues even beyond China," she told Bloomberg TV.
The yuan also took a hiding, shedding more than 1.3 per cent at one point against the dollar, its heaviest fall in more than three years. The currency had been sitting around 10-month highs on the back of optimism the two sides would sign off on a trade pact.
"Investors will remain bearish on the yuan, as they reprice in trade war risks because the new developments are a reversal of previous positive progress," Ken Cheung, senior foreign-exchange strategist at Mizuho Bank.
"The news was unexpected." However, while trading floors are awash with red, Stephen Innes at SPI Asset Management remained positive.
"We do know the president tends to retreat from more aggressive displays, so I am viewing this thinly veiled threat as political posturing or a tactical decision to apply more pressure on China to put through a trade deal that aligns with the best USA economic interest at heart.
"Despite US-China trade talks hitting an apparent impasse based on (the) tweet, I think a deal will be signed shortly."
Trump's outburst overshadowed another blockbuster US jobs report Friday that reinforced the view that the economy is in rude health, while measured wage inflation eased pressure on the Federal Reserve to hike interest rates.
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....
— Donald J. Trump (@realDonaldTrump) May 5, 2019 ">
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....
— Donald J. Trump (@realDonaldTrump) May 5, 2019
Let the Truth be known. If you read VB and like VB, please be a VB Supporter and Help us deliver the Truth to one and all.
Sujit Nair raises concerns over speculation of DMK-AIADMK understanding to block TVK
Chennai: Journalist and political commentator Sujit Nair has expressed concern over speculation that the Dravida Munnetra Kazhagam and the All India Anna Dravida Munnetra Kazhagam could explore a post-poll understanding to prevent Vijay-led Tamilaga Vettri Kazhagam from forming the government in Tamil Nadu.
In a social media post, Sujit Nair said the election verdict in Tamil Nadu reflected a clear public demand for political change and argued that the mandate should be respected irrespective of political preferences.
Referring to reports and political discussions surrounding a possible understanding between the DMK and AIADMK, he said he hoped such developments remained only speculative conversations and did not turn into reality.
Nair stated that if such an alliance were to take shape, it would raise serious questions about ideological politics in the country. He said TVK had emerged through a democratic electoral process and that the legitimacy to govern in a parliamentary democracy comes from the people’s verdict.
According to him, attempts to prevent an electoral winner from forming the government through unexpected political arrangements may be constitutionally valid, but many people could view them as politically opportunistic.
He further said that such a move could particularly affect the political image of the DMK, which has historically projected itself around ideology, social justice and opposition politics. Nair said that in ideological terms, the DMK appeared closer to TVK than to the AIADMK, and joining hands with its long-time political rival only to remain in power could weaken its broader political narrative.
He added that the same questions would apply to the AIADMK as well, as the party had spent decades positioning itself against the DMK and such an arrangement could create discomfort among its cadre and supporters.
Drawing a comparison with Maharashtra politics in 2019, Nair said he had expressed similar views when the Shiv Sena formed an alliance with the Indian National Congress and the Nationalist Congress Party after the Assembly elections.
He said post-poll alliances between long-standing political rivals often create a public perception that ideology and electoral mandates become secondary when political power equations come into play.
Nair also said such developments increase public cynicism towards politics and reinforce the belief among voters that ideology is often sidelined after elections.
He maintained that the Tamil Nadu verdict was emphatic and said respecting both the spirit and substance of the mandate was important for the credibility of democratic politics.
