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Washington considers curbs on Chinese investments in technology deemed sensitive, while Indonesia boosts capital requirements for lenders and Asia is greeted by another late equity meltdown from the U.S. Here are some of the things people in markets are talking about.
U.S. stocks melted down late in the day, with the technology sector leading the charge lower. While the S&P 500 fell 1.7%, there was massive dispersion among the sectors: tech fell 3.5%, while four industry groups gained and the leader, utilities, rose 1.5%. Emerging-market shares eked out a 0.1% gain after rising as much as 1% earlier. The Cboe Volatility Index, or VIX, ended in the mid-22 range. U.S. Treasury yields also tumbled, with the 10-year dropping from a session high above 2.85% to right around 2.78% at the end of the day. The Bloomberg Dollar Spot Index gained 0.3%, while WTI crude fell back below $65. General Electric jumped the most in two months amid speculation Warren Buffett will buy a stake in the company.
Crackdown on Chinese Investment
The Trump administration is considering a crackdown on Chinese investments in technologies the U.S. considers sensitive by invoking a law reserved for national emergencies, among other options, according to people familiar with the matter. Treasury Department officials are working on plans to identify technology sectors in which Chinese companies would be banned from investing, such as semiconductors and so-called 5G wireless communications, according to four people with knowledge of the proposal, who spoke on the condition of anonymity.
Indonesia Ups Capital Requirements
Indonesia ordered the nation’s biggest lenders to set aside additional capital to bolster their ability to absorb losses and protect against any bank failures. The Financial Services Authority, known as OJK, told the country’s systemically important banks to create a tier-1 capital surcharge of between 1 percent and 3.5 percent of risk-weighted assets, depending on the size and perceived riskiness of the lender, the regulator said in a statement on its website Tuesday. Banks have until Jan. 1 to meet the additional requirement, it said.
China Banks Stage Comeback
Three of China’s largest banks posted better-than-expected profit growth in 2017 as a strengthening economy curbed soured loans and the government’s campaign to cut debt boosted their lending margins. Industrial & Commercial Bank of China on Tuesday reported a 3 percent increase in net income last year, while Agricultural Bank of China on Monday posted a 5 percent gain. China Construction Bank, which also reported earnings Tuesday, said its net profit rose 4.7 percent. All three lenders beat analysts’ estimates.
After U.S. tech stocks took a late turn for the worse Tuesday, investors will be trying to figure out just how bad the damage will be as the Asia day gets going. As the session gets going, they’ll have final 4Q South Korean GDP figures to look forward to. Other than that, key economic data to watch out for include New Zealand business sentiment and rate decisions from Thailand and South Africa. Also of interest will be earnings slated from Citic, China Telecom and China Everbright.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- The yuan jumps to the highest level since 2015 as trade tensions ease.
- Huawei unveils its iPhone X challenger.
- Copper, copper everywhere.
- There are risks to the global economy as Trump seeks to open China.
- These are the 50 best restaurants in Asia.
- McDonald's has a problem in pizza-loving India.
- Qantas eyes Chicago for its next ultra-long-haul flight.
— With assistance by Garfield Clinton Reynolds