HONG KONG: Asian stocks were largely flat Monday, as US President Donald Trump lashed out at “unfair” trade practices and China’s central bank chief condemned excessive debt.
The twin warnings canceled out positive leads from commodity and share markets — after Wall Street set new records Friday — and a weaker yen.
Trump began his marathon Asia tour in earnest Monday by criticizing trade relationships with Tokyo and Beijing, saying that close ally Japan had been “winning” for decades at the expense of the United States, and calling commerce with China “very unfair.”
In particular, Trump’s criticism of a “massive trade deficit” that “has to come down” prompted concern among Asian exporters.
Markets were already nervous over the prospect of an escalation in rhetoric — or even further missile and nuclear tests — from North Korea during the US president’s Asian tour.
Speaking in Japan, Trump called the North’s missile program “a threat to the civilized world and international peace and stability” and warned: “The era of strategic patience is over.”
Trump is due to visit South Korea from Tuesday to Wednesday.
Hong Kong shares recovered from morning losses to end the day flat. Seoul lost 0.3 percent, following massive selling by institutional investors.
Shanghai stocks shrugged off warnings by China’s central bank governor Zhou Xiaochuan about “hidden, complex, sudden, contagious and hazardous” threats to the economy from excessive leveraging.
Zhou’s article, run on the People’s Bank of China website Saturday, signalled that tight government regulation on debt is unlikely to ease up now the key Communist Party congress has ended, analysts said.
It follows a Chinese government crackdown on banks using excessive leveraging, including unregulated “shadow banking.”
But the market gained support amid better news from a Moody’s report showing the growth of China’s shadow banking came to a halt in the first half of 2017.
“Total shadow banking assets barely grew during the first six months of 2017 and declined as a percentage of GDP for the first time since 2012,” it said.
Shanghai shares recovered from morning losses to close up 0.5 percent.
Tokyo was broadly flat, with the weak yen — good for the profits of Japan’s exporting firms — helping traders brush off Trump’s criticism.
Tokyo investors were also encouraged by gains on Wall Street and brisk corporate results reported recently by Japanese companies.
Wall Street closed at fresh all-time highs Friday, with technology shares especially sky-bound following a solid US jobs report and strong Apple earnings.
All three US indices ended at records, with the Nasdaq gaining the most and the Dow notching its 56th record high of 2017 as third-quarter earnings season entered the home stretch.
Elsewhere oil futures continued to rally Monday, with WTI crude prices building on a two-year high set last week.
Prices have risen due to growing global demand and OPEC-led supply curbs, with traders now closely monitoring the impact of a sweeping crackdown in oil-rich Saudi Arabia, which included the arrest of billionaire investor Prince Al-Waleed bin Talal.
In Europe, London and Frankfurt opened down 0.1 percent while Paris shed 0.2 percent in early trade.
Tokyo — Nikkei 225: FLAT at 22,548.35 (close)
Hong Kong — Hang Seng: FLAT at 28,596.80 (close)
Shanghai — Composite: UP 0.5 percent at 3,388.17 (close)
London — FTSE 100: DOWN 0.1 percent at 7,555.11
Euro/dollar: DOWN at $1.1607 from $1.1610 at 2100 GMT Friday
Pound/dollar: UP at $1.3083 from $1.3073
Dollar/yen: UP at 114.32 from 114.05 yen
Oil — West Texas Intermediate: UP 39 cents at $56.03 per barrel
Oil — Brent North Sea: UP 48 cents at $62.55 per barrel
New York — DOW: UP 0.1 percent at 23,539.19 (close)