Asian stocks hit as Trump drops Kim summit but losses tempered

A man walks past a bank electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Friday. (AP Photo/Vincent Yu)
Updated 25 May 2018
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Asian stocks hit as Trump drops Kim summit but losses tempered

  • Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China.
  • In a letter released by the White House, Trump told Kim he was canceling the summit because of North Korea’s “anger” and “hostility.”

HONG KONG: Asian markets mostly fell on Friday as Donald Trump shocked the world by pulling out of next month’s historic summit with Kim Jong Un, though analysts said the losses were tempered by hopes the talks can be rekindled.
Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China and threaten tariffs on car imports.
The news Thursday took many by surprise — including North and South Korean officials — and fueled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.
In a letter released by the White House, Trump told Kim he was canceling the summit because of North Korea’s “anger” and “hostility.” The message came after a key aide to Kim hit out at comments from Vice President Mike Pence, saying they were “ignorant and stupid” and warning the talks could be canceled.
However, Trump’s letter added that the talks could still go ahead “at a later date.”
For its part, Pyongyang said the decision “unexpected” and “regrettable” but added: “We again state to the US our willingness to sit face-to-face at any time in any form to resolve the problem.”
“It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25 percent car import tariff and canceled the summit with North Korea,” said Greg McKenna, chief market strategist at AxiTrader.
“Not only was the summit canceled but it was back to threatening the DPRK with a military response.”Wall Street ended lower, while Asian trading was muted. Tokyo ended the morning slightly higher, while Hong Kong slipped 0.3 percent and Shanghai was barely moved. Sydney and Singapore each fell 0.1 percent while Seoul was 0.2 percent lower.
Manila and Kuala Lumpur also fell but Wellington, Taipei and Jakarta were in positive territory.
While warning the issue remained fragile, analysts said there was still hope the meeting will go ahead.
“As we’ve seen countless times before, the president tends to walk back some of his more boisterous rhetoric time and time again,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“While the US and their allies have offered a way to prosperity for North Korea, it was never going to come without some significant concession on the nuclear non-proliferation front.”
And Eli Lee, Bank of Singapore’s head of investment strategy, added: “Given the US’ surprising acceptance of the meeting only in March, the cancelation... may simply be due to the fact that both sides need simply more time for preparation and to find a middle ground in terms of their demands.”
On oil markets, both main contracts extended Thursday’s more than one percent losses after Russia said an agreement with OPEC to cap production — which has provided support to prices in recent years — could be up for revision at a meeting next month .
The comments from Energy Minister Alexander Novak dented a rally in the commodity, which has hit three-and-a-half-year highs on the back of improving demand and supply worries from Venezuela and Iran.

Tokyo — Nikkei 225: UP 0.1 percent at 22,457.20 (break)
Hong Kong — Hang Seng: DOWN 0.3 percent at 30,666.38
Shanghai — Composite: FLAT at 3,154.04
Euro/dollar: DOWN at $1.1705 from $1.1725 at 2100 GMT
Pound/dollar: DOWN at $1.3364 from $1.3385
Dollar/yen: UP at 109.53 from 109.30 yen
Oil — West Texas Intermediate: DOWN nine cents at $70.62
Oil — Brent North Sea: DOWN 12 cents at $78.67
New York — Dow: DOWN 0.3 percent at 24,811.76 (close)
London — FTSE 100: DOWN 0.9 percent at 7,716.74 (close)
 


Tesla nears 3-month low as JPMorgan adds to private deal doubts

Updated 20 August 2018
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Tesla nears 3-month low as JPMorgan adds to private deal doubts

  • Slashing its price target for Tesla from $308 to $195, the brokerage said it did not believe Chief Executive Officer Elon Musk had funds for a plan
  • Tesla shares fell nearly 4 percent

LONDON: Tesla shares fell nearly 4 percent on Monday as a $113 cut in JPMorgan Chase’s price target for the electric carmaker added to growing doubts among market players about a plan to take the company private.
Slashing its price target for Tesla from $308 to $195, the brokerage said it did not believe Chief Executive Officer Elon Musk had funds for a plan announced by a tweet that said “funding secured” two weeks ago.
Analysts from the US bank had upped its forecast from $198 to $308 after a roughly $100 surge in Tesla stock following Musk’s tweets on Aug. 7 and the note on Monday was the latest evidence of skepticism about the deal on Wall Street.
People familiar with the matter said on Sunday that PIF, the Saudi Arabian sovereign wealth fund that Musk says had been pressing to help fund the buyout, is in talks to invest in aspiring Tesla rival Lucid Motors Inc.
“Our interpretation of subsequent events leads us to believe that funding was not secured for a going private transaction, nor was there any formal proposal,” JPMorgan analyst Ryan Brinkman wrote in a client note.
“Tesla does appear to be exploring a going private transaction, but we now believe that such a process appears much less developed than we had earlier presumed, suggesting formal incorporation into our valuation analysis seems premature at this time,” Brinkman said.
JPM now targets the stock, which it continues to value at underweight, back at $195, versus Friday’s close of $305.50. The median price target of the Wall Street analysts covering Tesla is $336.
Tesla shares touched a three-month low of $285 in premarket trading before recovering to trade around $290, reducing its market value back below that of General Motors as the biggest US carmaker.
An interview with the New York Times, in which Musk said he was under major emotional stress in the “most difficult year” of his life, on Friday added to investors’ concerns over his leadership after a series of social media spats.
A person with direct knowledge of the matter told Reuters last week that the SEC has opened an inquiry related to Musk’s tweets on the buyout and the billionaire is also facing a class action suite from investors who lost money in the share moves.
“The lack of process to (Musk’s) announcement has now caused governance and competency concerns which are starting to snowball,” said Tigress Financial Partners analyst Ivan Feinseth.