Asia report: Markets unshaken as Mnuchin warns China over devaluation

Markets across Asia remained largely steady on Wednesday as US treasury secretary Steve Mnuchin warned China against deliberate devaluation of the yuan as trade disputes between the two countries continue.

The currency has dropped almost 11% from its 2018 peak in March, though analysts have attributed the drop to China’s slowing economy rather than competitive devaluation from Beijing.

However, Mnuchin, who is reported to be under pressure from the White House to formally designate China as a currency manipulator, said that US officials are looking forward to discussing the “various factors” behind the yuan’s movement.

Japan’s Nikkei 225 was up by 0.16% at 23,506.04, while the yen was down 0.24% against the US dollar at JPY 113.24.

SoftBank was one of the index’s major fallers, dropping by over 5% amid its discussions to take a majority stake in shared office space provider WeWork, of which it already owned nearly 20%.

An investment of between $15bn and $20bn would likely stem from SoftBank’s $92bn Vision Fund, which was largely backed by wealth funds from Saudi Arabia and Abu Dhabi.

On the Chinese mainland, the Shanghai Composite climbed by 0.18% to 2,725.84 as the utilities, mobile and telecoms sectors performed strongly, though the tech-heavy Shenzhen Composite dropped by 0.15% to 1,383.05.

Shenzhen Geoway, Hengtong Logistics and Delixi Xinjiang Transportation all gained upwards of 10%, a strong performance in the face of Tuesday threats from Donald Trump for tariffs on an additional $267bn-worth of Chinese goods.

After falling for six consecutive sessions, Hong Kong’s Hang Seng Index crept up by 0.08% to 26,193.07 in Wednesday trading, though index heavyweight Tencent threatened to drag it into negative territory as it fell by 2.5%.

However, the index was bolstered by a strong showing from top-gainers China Shenhua Energy, ZhongAn Online P & C Insurance and China Mobile, which all rose by over 3%.

Meanwhile, South Korea’s Kospi fell by 1.12% to 2,228.61 after the International Monetary Fund cut its growth forecast for the country.

Share prices in the most heavily-weighted stocks on the index remained subdued throughout the day, though electronics giant Samsung racked up gains of just over 1%.

Brent Crude was up by 0.20% at $85.17 and WTI increased by 0.09% to $75.03.

In Australia the S&P/ASX 200 was up by 0.14% at 6,049.81, rebounding modestly after a muted performance on Tuesday.

The increase was driven by healthcare and pharmaceutical stocks, who had their best performance in four weeks as CSL, Cochlear, Mayne Pharma Group and Nanosonics were all on the up.

New Zealand’s S&P/NZX 50 fell by 0.21% to 9,050.82, the eighth consecutive drop for the index as investors remain unsure of the global economic outlook and US bond yields continue to rise.

Peter McIntyre, investment adviser at Craigs Investment Partners, said: "There's still ongoing issues with trade wars, there are debt problems in Italy - there's probably more to worry about in the market today than three or four months ago."

Again, growth oriented stocks such as Pushpay Holdings and Synlait Milk bore the brunt of the damage, each dropping by more than 2%, while milk processor Frontera Shareholders’ Fund fell after it downgraded its farmgate payout forecast.

Meanwhile the Australian dollar was down 0.10% against the greenback at AU$1.41, while New Zealand’s dollar dropped by 0.23% to NZ$1.55.