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Unfavorable time for Asia shares amidst the Trade war

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Unfavorable time for Asia shares amidst the Trade war

Due to the ongoing US – Chinese trade war, shares across Asia have sunk on Monday (August 26, 2019) itself. The trade war has already started affecting the world economy and market currencies.

Hong Kong’s Hang Seng index started showcasing a downfall in the region as it plunged more than 2% once it reached the final hour of trading.

Meanwhile, last Friday, the US president Donald Trump tweeted and stated that America will hike tariffs on $250 billion worth of Chinese goods to 30% from 25%, as reported by CNBC. Also, on the same day, Beijing reported new tariffs on $75 billion of U.S. goods.

As reported by Reuters, China’s onshore yuan stumbled 0.7% at one point to a new 11-year low of 7.15 to the dollar, whereas MSCI’s broadest index of Asia-Pacific shares outside Japan and Australia shed 1.9% and 1.3% respectively. Japan’s Nikkei fell 2.2%, while Shanghai blue chips was down 1.2%.

“Downside risks are increasing for both the global economy and markets. As a result, we are reducing risk in our portfolios by moving to an underweight in equities to lower our exposure to political uncertainty. We continue to favour carry strategies in credit and foreign exchange markets, which benefit from central bank easing in a low-growth environment,” said Mark Haefele, global chief investment officer at UBS.

(Reference: Reuters, CNBC)
(Image source: REUTERS/Toru Hanai)