Market dips on US-China trade row

The stock declined Thursday on profit-taking and as optimism over the China-US trade talks took a jolt after Donald Trump signed into law a bill supporting Hong Kong’s pro-democracy protests, prompting an angry response from Beijing.

The Philippine Stock Exchange Index fell 68.23 points, or 0.9 percent, to 7,768.66 on a value turnover of P5.4 billion. Losers overwhelmed gainers, 116 to 64, with 52 issues unchanged.

JG Summit Holdings Inc. of the Gokongwei Group shed 2.7 percent to P76.30, while unit Universal Robina Corp., the biggest snack food maker, dropped 2 percent to P151.

BDO Unibank Inc., the largest lender in terms of assets, declined 1.9 percent to P154, while Philippine National Bank, the fifth-largest bank, fell 2.4 percent to P38.20. 

The rest of Asian markets mostly fell Thursday. Global equities have been surging in recent weeks—with Wall Street hitting multiple records—on expectations the much-vaunted negotiations would result in a partial pact soon.

Hong Kong fell 0.1 percent in the afternoon and Shanghai ended down 0.5 percent, while China’s yuan was also slightly lower. Tokyo finished 0.1 percent lower.

Singapore slipped 0.4 percent and Seoul dropped 0.5 percent while Taipei and Jakarta also retreated.

However, Sydney and Mumbai rose 0.2 percent and Wellington added 0.8 percent after data showed a pick-up in New Zealand business confidence. 

Trump on Wednesday put his name to the Hong Kong Human Rights and Democracy Act, which requires the president to annually review the city’s favorable trade status and threatens to revoke it if the territory’s freedoms are quashed.

He also agreed to legislation banning sales of tear gas, rubber bullets and other equipment used by Hong Kong security forces in putting down protests that have wracked the city since June and have battered its economy.

The president spoke of “respect” for his Chinese counterpart Xi Jinping and said he hoped all sides could “amicably settle their differences.”

Trump had seemed reluctant to sign the bill with the trade talks still ongoing, but with almost unanimous US congressional support for the measure, he had little political room to maneuver.

China hit out at the decision, calling it “extremely abominable,” and threatened “firm countermeasures,” though it did not specify what they would be. Hong Kong’s government expressed “extreme regret” at the move.

China’s foreign ministry summoned the US ambassador and lodged a protest. It called on the US to “refrain from putting the bill into practice, and immediately stop interfering in Hong Kong affairs and China’s internal affairs, so as to avoid further damage to China-US relations and bilateral cooperation in important areas.”

The signing, while not entirely surprising, spooked investors, who had been in an upbeat mood following a string of positive comments from both sides indicating the first part of a wider agreement was close.

“Trump’s signing the Hong Kong bill is likely to trigger another risk-off session,” said Hao Zhou, senior emerging markets economist at Commerzbank AG. “The phase one deal is likely to be delayed.” With AFP