An escalation of political unrest in Hong Kong drove its shares to their biggest one-day fall in three months yesterday, while uncertainty over the US-China trade deal also clouded sentiment in emerging markets.
“(The) market fears that there will be more active intervention from China in Hong Kong, and that could get some pushback from the US and risk playing into the trade negotiations, which are much more important for the global economy,” said Jakob Christensen, head of EM research at Danske Bank.
“Markets are now more or less priced for quite a high likelihood of a “phase one” (trade) deal.
So now we need concrete evidence (of) a timeline on reaching and finalising the deal,” Danske’s Christensen said.
Most developing world currencies lost ground against the US dollar, which held steady near one-month highs.
The trade-reliant South Korean won was 0.6% lower, leading losses among Asian currencies, while the South African rand slipped 0.1%.
Turkey’s lira fell to its lowest in 2-1/2 weeks to 5.77 to the dollar, extending losses this month on looming threats of US sanctions over its offensive into Syria.
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