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Analysts are all in on Asian stocks, while the U.S is putting pressure on Seoul via its military support, and China’s Treasuries hoard continues to shrink. Here are some of the things people in markets are talking about.
The G-20, Trade Wars, and Japan's beleaguered Finance Minister
IMF Managing Director Christine Lagarde urged countries to avoid being sucked in to a global trade war in the wake of U.S. tariffs on steel and aluminum, disagreeing with President Donald Trump’s views that such conflicts are easy to win. She issued the warning as finance ministers and central bank governors from the Group of 20 prepare to meet in Buenos Aires from March 19-20. Japanese Finance Minister Taro Aso, who’s facing calls to resign after his ministry doctored files at the center of a cronyism scandal, won’t attend the gathering next week, according to people familiar with the matter, costing him the chance to push back against U.S. tariffs and voice his views on currencies.
U.S. Ramps Up Pressure on Seoul
President Donald Trump hinted his administration might roll back military support for South Korea, putting new pressure on the Asian country as it resumes talks with the U.S. to overhaul their trade deal and seeks tariff exemptions. “We have a very big trade deficit with them, and we protect them,” Trump said Wednesday, according to an audio recording obtained by the Washington Post. “We lose money on trade, and we lose money on the military. We have right now 32,000 soldiers on the border between North and South Korea. Let’s see what happens.”
Analyst Ratings Looking (Too?) Good
Among more than 18,000 analyst ratings for stocks in the MSCI Asia Pacific Index, 60 percent are buy recommendations -- the highest since October 2011 -- according to data compiled by Bloomberg. While earnings are still expected to grow this year, there has been a slight deceleration in the pace of profit upgrades, the data show. There is some risk the overflowing optimism points to a vulnerability for equity investors if markets shift, although the improving economic outlook in the region suggests that is unlikely at the moment, strategists say.
China Dumps Treasuries
China’s holdings of Treasuries fell to the lowest level since July as investors soured on U.S. fixed-income securities and the dollar at the start of the year. China’s portfolio of U.S. bonds, notes and bills sank to $1.17 trillion in January from $1.18 trillion a month earlier, according to Treasury Department data released Thursday. China remains the largest foreign creditor to the U.S., followed by Japan, whose holdings rose for the first month since July, to $1.07 trillion from $1.06 trillion.
Coming Up...
Equity traders will be hoping for a quiet end to what's been a pretty rough week as they nurse their wounds ahead of next week's expected U.S. rate hike. There'll be plenty of interest in Singaporean export figures and Japanese industrial production data due Friday. Europe will feature Turkish industrial output and Euro-area CPI, as well as the start of a two-day forum of the U.K. Conservative Party in London, where senior Cabinet ministers are due to speak. The North American session brings U.S. housing starts, industrial production, Michigan consumer sentiment, and Canadian manufacturing sales.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- The Hong Kong-Singapore rivalry gets unusually heated.
- Australia's Wesfarmers plans to spin off supermarket chain Coles.
- The U.S. sanctions Russians charged by Mueller for election meddling.
- A home on Hong Kong's peak sets Asia's price record by area.
- Just how awesome was Stephen Hawking? Pretty awesome.
- The undoing of the Qualcomm/Broadcom deal.
- Singapore is the world's most expensive city, again.
- Meet the diamond tycoon behind India's alleged $2 billion bank fraud.
--With assistance from Garfield Clinton Reynolds Andrew Mayeda Toluse Olorunnipa Eric Lam and Sarah McGregor
To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net.
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