It's time now for an in-depth look at the global markets on this Tuesday.
And for that I'm joined on the line by Mr. Daniel Yoo, global strategist at Kiwoom Securities.
Mr. Yoo, thank you for making time this afternoon.
Thank you.
A whole host of factors have hit the Korean markets this week, including the escalation
of the U.S.-China trade war, and this being the first week of trading since Japan said
it's taking Korea off its white list.
Yesterday the Kospi down 2 percent, the Kosdaq absolutely hammered, down 7 percent.
And today they continued to fall.
Stocks were suffering their worst one-day losses since February 2018 on Monday after
China allowed the yuan to sink in apparent retaliation against U.S. threats to impose
new tariffs on Chinese goods imported into the United States.
The S&P 500 and Dow Jones industrials each tumbled 3.2%.
The Nasdaq Composite plunged nearly 4%.
Markets around the world also slumped as the trade war flared up again.
The yuan USD/CNY was allowed to weaken to more than 7 yuan per dollar, a level not seen
in at least 10 years.
The effect is to make Chinese goods cheaper against U.S. goods and dampen U.S. exports
to China.
The Trump Administration and China's government have been waging a furious game of tariffs
and counter-tariffs as Trump seeks to rebalance the trade relationship between the countries.
After a meeting between Chinese and U.S. officials last week didn't go well, Trump ordered the
tariffs boosted.
China, aggressively asserting a leadership role in global trade matters, has said it
won't be bullied.
Korean market after sharp fall yesterday by more than 2.5%, today also started with 2.83%
fall, but rebounded and closed at 0.89% down.
Kosdaq also rebounded after falling 7.5% yesterday… but not by much…
Nikkei falls another 1% after 1.7% decline yesterday.
Chinese market also continues to fall 2% plus…
Chinese government's strong stands is not good news for the global equity market.
Now, with China, for the first time since the financial crisis the RMB is trading at
more than 7 to the dollar.
President Trump, as he said he would, has now designated China a currency manipulator.
What has China done here, and why the designation now?
The U.S. Treasury Department on Monday designated China as currency manipulator, a historic
move that no White House had exercised since the Clinton administration.
"Secretary Mnuchin, under the auspices of President Trump, has today determined that
China is a Currency Manipulator," the Treasury Department said in a release.
"As a result of this determination, Secretary Mnuchin will engage with the International
Monetary Fund to eliminate the unfair competitive advantage created by China's latest actions."
The formal designation - the first since President Bill Clinton's administration in 1994 - came
after China on Monday allowed its currency to breach a psychological level.
"In recent days, China has taken concrete steps to devalue its currency, while maintaining
substantial foreign exchange reserves despite active use of such tools in the past," the
Treasury Department added.
"The context of these actions and the implausibility of China's market stability rationale confirm
that the purpose of China's currency devaluation is to gain unfair competitive advantage in
international trade."
The yuan fell to 7 against the dollar earlier in the session for the first time since 2008.
It is set to If designated as an exchange rate manipulation bureau, bilateral consultation
will be made to improve exchange rate problems for one year according to the US Trade Promotion
Act.
If the problem is not corrected here, the United States
Prohibition of funding related to foreign aid
No government
procurement contract request for additional monitoring of IMF (International
Monetary Fund).
The Asian region in terms of stocks and currencies.
How does the designation of China as a currency manipulator affect the markets of its neighbors?
"On Tuesday morning, the People's Bank of China set the yuan fixing at 6.9683 per dollar.
"A Reuters estimate had expected a weaker midpoint of 6.9736.
"In Monday's Asian afternoon trading hours, the onshore currency changed hands at 7.0304
against the dollar, while the offshore yuan traded at 7.0807 against the greenback.
Also, Korean Won depreciated to 1215 won to dollar rate.
While Japanese Yen continues to appreciate 105 level…
However today, it rebounded to 106.7 level.
If financial market is
to stabilize we need to see dollar depreciates against global currency gradually…
Alright, Mr. Yoo.
That's all we have time for today.
Interesting times.
Thanks for sharing your insights.