Asian-Pacific meeting puts U.S-China trade spat in spotlight

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It is MarketWatch’s Anneken Tappe here to give readers a rundown of some of the most significant developments, and asset moves, in emerging markets. And on Monday, that very much includes China and the worries about its growth prospects amid nasty trade relations with the U.S.

APEC meeting

Let’s start in Papua New Guinea — the South Pacific island nation neighboring Indonesia and Australia — where over the weekend the Asia-Pacific Economic Cooperation nations gathered for their annual summit. In the spotlight was the degree to which the Beijing-Washington tariff dispute has disrupted global economies.

The verdict? APEC nations failed to even agree on a joint statement to conclude the summit for the first time in its 29-year history, underscoring the perilous road ahead.

APEC, the regional economic forum dedicated to maximizing trade relations within the Asia-Pacific region, may be an ideal place to gauge the fallout from U.S.-China squabbles because it represents nations that are critical to the supply chain and are vulnerable to problems between the world’s two largest economies.

But detente seemed far off: Vice President Mike Pence, speaking at APEC, struck a defiant tone Sunday, saying “the United States will not change course until China changes its ways.” That comment came after Chinese President Xi Jinping said Saturday that the dispute would produce no winners.

Read: Here’s why a trade deal might not save China’s economy or emerging markets

Also see: Treasury yields rise as U.S.-China tensions come into focus

“If the barbed exchanges between China and the U.S. at the very confrontational and deeply divided APEC meeting are any guide, the prospects for any near-term ebbing of U.S.-China trade tensions, let alone achieving some form of accord at the month-ending G-20 meeting in Buenos Aires, look to be very remote, even if Trump’s sharp mood swings and often deluded and/or fact-free evaluations always lend an element of ‘anything can happen,’” said Marc Ostwald, global strategist at ADM Investor Services.

Asian stocks shrugged off developments in the Pacific Rim. The Shanghai Composite Index














SHCOMP, -2.13%












, for example, closed 0.9% higher on Monday. On Tuesday, as Asian stocks suffered from a pullback in the technology sector, the index was down more than 2%.

India’s central bank

The Reserve Bank of India announced Monday it would take measures to improve liquidity in its financial sector, according to Reuters, giving in to demands from Prime Minister Narendra Modi’s government and leading investors to worry about the central bank’s independence.

Modi is putting pressure on the RBI as a fresh general election looms in May 2019, and as India is struggling with a scandal-ridden financial sector. Modi has lost some of his pro-business shine since he took office, which is reflected in part in the stock market’s reaction thus far to the Indian leader. The iShares MSCI India ETF














INDA, -1.71%












 has dropped more than 11% in the year so far, according to FactSet.

India’s rupee














USDINR, -0.2260%












 showed some signs of strength Monday, but that was likely more linked to weakness in the greenback, but managed to defend them on Tuesday when the opposite held true for the buck. Still, this year, it has lost more than 10% against the dollar, and the systemic issues aren’t new.

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Source : MTV