Asian stocks kept in check by HK unrest

Saturday, 4 October 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Asian stocks were poised for their fourth-straight weekly fall on Friday, with the regional index drifting in an aimless morning session as the civil unrest in Hong Kong and caution ahead of a closely-watched U.S. jobs report kept investors on edge. Already disappointed by the European Central Bank, which gave no new hints of an imminent sovereign bond buying program, markets were further underwhelmed by a survey showing growth in China’s services sector eased last month.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.06%, on track for a fourth straight week of declines. It has fallen more than 8% in the last four weeks, marking its worst performance in over a year. Tokyo’s Nikkei slipped 0.19%, Australia’s S&P/ASX 200 index was a touch firmer, while Hong Kong stocks fell 1.36%. Markets in South Korea, India and China are closed for public holidays. “While U.S. equities managed to recover most of lost grounds and closed flat, a sense of risk-off tone still prevails as markets continue to be buffeted by a combination of factors,” said Gary Yau, an analyst at Credit Agricole. Growth worries in the euro zone and China, geo-political risks as well as concerns about the effects of the Federal Reserve normalising monetary policy have all conspired to unsettle global equity markets in recent weeks. They have also driven the U.S. dollar to a four-year high against a basket of major currencies as markets bet the Federal Reserve will hike interest rates well before the ECB and Bank of Japan. The dollar index was last at 85.757, not far from the peak of 86.218 set earlier in the week. Against the yen, the dollar reached a six-year high of 110.09, while the euro traded at $1.2656, near a two-year trough of $1.2571 plumbed on Tuesday. Whether dollar bulls prevail in the short term depends very much on the influential U.S. nonfarm payrolls report due later on Friday. Analysts polled by Reuters expect U.S. employers to have hired 215,000 workers in September, up from a disappointing 142,000 in August. Investors were also keeping a wary eye on developments in Hong Kong, whose leader Leung Chun-ying defied pro-democracy protesters’ demands to step down by Friday. Leung repeated police warnings that the consequences would be serious if protesters sought to surround or occupy government buildings. However, Chief Secretary Carrie Lam would hold a meeting with students soon to discuss political reforms, although no time frame has been announced. The combination of growth worries, geopolitical risks and a stronger U.S. dollar have weighed on commodity prices. Copper traded at $6,651 a ton, languishing near a five-month low of $6,600 plumbed overnight. Oil prices wallowed at two-year lows, with brent crude at $93.55 a barrel.

Hong Kong leader refuses to resign but offers talks with protesters

Reuters: Hong Kong leader Leung Chun-ying defied pro-democracy protesters’ demands to step down by Friday, with pressure also increasing from Leung’s backers in Beijing over one of the most serious political challenges they have faced in decades.

Leung refused to bow to an ultimatum from protesters to resign and repeated police warnings of serious consequences should they try to block off or occupy government buildings. He told reporters just minutes before the ultimatum expired at midnight that Chief Secretary Carrie Lam would meet students soon to discuss political reforms, but gave no timeframe. Tens of thousands have taken to Hong Kong’s streets in the past week to demand full democracy, including a free voting system when they come to choose a new leader in 2017. The protests have ebbed and flowed in the days since police used pepper spray, tear gas and baton charges last Sunday to break up the biggest demonstrations seen since the former British colony was handed back to Chinese rule in 1997. China rules Hong Kong through a “one country, two systems” formula underpinned by a “Basic Law”, which accords Hong Kong some autonomy and freedoms not enjoyed on the mainland and with universal suffrage as an eventual goal. Beijing, however, decreed on Aug. 31 it would vet candidates who want to run for chief executive at an election in 2017, angering democracy activists who took to the streets. While Leung made an apparent concession by offering talks, Beijing restated its resolute opposition to the protests and a completely free vote in Hong Kong. “For a few consecutive days, some people have been making trouble in Hong Kong, stirring up illegal assemblies in the name of seeking ‘real universal suffrage’,” China’s official People’s Daily said in a front-page commentary on Friday. “Such acts have outrightly violated the Basic Law, Hong Kong’s law, as well as the principle of the rule of law, and they are doomed to fail,” the commentary warned. Thousands of protesters had gathered outside Leung’s office in central Hong Kong in anticipation of the ultimatum, but were disappointed when Leung stood firm.

Reuters: Hong Kong leader Leung Chun-ying defied pro-democracy protesters’ demands to step down by Friday, with pressure also increasing from Leung’s backers in Beijing over one of the most serious political challenges they have faced in decades. Leung refused to bow to an ultimatum from protesters to resign and repeated police warnings of serious consequences should they try to block off or occupy government buildings. He told reporters just minutes before the ultimatum expired at midnight that Chief Secretary Carrie Lam would meet students soon to discuss political reforms, but gave no timeframe. Tens of thousands have taken to Hong Kong’s streets in the past week to demand full democracy, including a free voting system when they come to choose a new leader in 2017. The protests have ebbed and flowed in the days since police used pepper spray, tear gas and baton charges last Sunday to break up the biggest demonstrations seen since the former British colony was handed back to Chinese rule in 1997. China rules Hong Kong through a “one country, two systems” formula underpinned by a “Basic Law”, which accords Hong Kong some autonomy and freedoms not enjoyed on the mainland and with universal suffrage as an eventual goal. Beijing, however, decreed on Aug. 31 it would vet candidates who want to run for chief executive at an election in 2017, angering democracy activists who took to the streets. While Leung made an apparent concession by offering talks, Beijing restated its resolute opposition to the protests and a completely free vote in Hong Kong. “For a few consecutive days, some people have been making trouble in Hong Kong, stirring up illegal assemblies in the name of seeking ‘real universal suffrage’,” China’s official People’s Daily said in a front-page commentary on Friday. “Such acts have outrightly violated the Basic Law, Hong Kong’s law, as well as the principle of the rule of law, and they are doomed to fail,” the commentary warned. Thousands of protesters had gathered outside Leung’s office in central Hong Kong in anticipation of the ultimatum, but were disappointed when Leung stood firm. Their numbers fell to hundreds as the sun rose on Friday and Hong Kongers prepared to go back to work after the two-day National Day holiday, although there were tense moments with about 100 police guarding the building. Protesters refused to allow two trucks carrying supplies for police guarding Leung’s office through their lines, although the stand-off remained peaceful. But there were signs of tension between public employees trying to go back to work and the protesters who have barricaded the area outside Leung’s office. “I need to go to work. I’m a cleaner. Why do you have to block me from going to work?” said one woman as she quarrelled with protesters. “You don’t need to earn a living but I do.” Other government workers milled around outside the building, waiting for instructions before the government later declared its main office building would remain closed for the day, with workers to go to secondary sites. Other protest sites in the Central business district, the luxury shopping area of Causeway Bay and in the densely populated residential Mong Kok district of Kowloon were quiet. Disappointment, suspicion Some protesters now suspect authorities are trying to buy time with their offer of talks while they wait for demonstrations to dwindle. “The government already has an answer in its heart. They will not let us have real universal suffrage,” said Isaac Chan, a 22-year-old private music tutor. “We think this is a tactic being used to cool the crowd because (Friday) is a work day, not a holiday,” he said. The protests so far have been an amalgam of students, activists from the “Occupy” movement and ordinary Hong Kongers, under the “Umbrella Revolution” banner adopted after many protesters used umbrellas to ward off pepper spray used by police almost a week ago. Some now fear that the lack of any clear leadership could prove to be a telling weakness for the disparate groups. “We are not worrying about excessive violence from police, as we don’t expect they will repeat it again when the whole world is watching,” said Kenneth Mok, 22, a civil engineering graduate, at the Admiralty protest site near Central. “We are worrying the movement will lose steam without a clear leader leading. We are worrying that people will go back to normal like nothing has happened,” he said. Student groups welcomed the offer of talks, but they urged followers to stay where they were to keep up the pressure on the government. The “Occupy Central with Love and Peace” movement reiterated its demand that Leung step aside. The protests have brought parts of the Asian trading hub to a standstill. ANZ economists sent out a research note on Friday estimating that the protests may have cost retailers HK$2.2 billion ($283.5 million) so far, with retailers of luxury goods, cosmetics and consumer durables hardest hit. Leung’s widely anticipated refusal to resign underlined that both sides appear to have dug in for a protracted stand-off. “In any place in the world, if there are any protesters that surround, attack, or occupy government buildings like police headquarters or the chief executive’s office ... the consequences are serious,” Leung said, echoing warnings from the police that their response to any such action would be robust. The “Occupy Central” movement presents one of the biggest political challenges for Beijing since it violently crushed pro-democracy protests in and around Tiananmen Square in 1989. Cracking down too hard could shake confidence in market-driven Hong Kong, which has a separate legal system from the rest of the country, but not reacting firmly enough could embolden dissidents in mainland China. China’s ambassador to Germany, Shi Mingde, told Reuters in Berlin that the protests could tarnish Hong Kong’s image as one of the world’s leading financial centres if the continued for a prolonged period. Hong Kong’s benchmark share index, the Hang Seng, plunged 7.3% in September, in part because of the uncertainty surrounding the protests. It was down 1% Friday morning, echoing falls in global markets. Spooked by the protests, some banks and other financial firms have begun moving staff to back-up premises on the outskirts of the city.