Asian stocks fell along with oil prices on Wednesday as US tariffs, including 104 per cent duties on Chinese goods, took effect for about 60 countries and President Donald Trump increased pressure on Beijing.
Japan's Nikkei index closed 3.1 per cent lower, while most other markets in the region also fell following Tuesday's rebound.
South Korea's Kospi fell 1.50 per cent and stocks in Taiwan sank further into bear territory, plummeting 5.69 per cent.
“Hopes of seeing Donald Trump roll back tariffs before they go live were dashed this morning – along with sentiment across global financial markets,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.
“I won’t say much about yesterday’s rebound: moves of that magnitude – above 2 to 3 per cent – aren’t sustainable unless there’s a clear resolution to the tariff problem.”
On Monday, Mr Trump threatened China with a 50 per cent additional duty if it did not drop its 34 per cent retaliatory tariff, which matched the levies he imposed on Beijing last week. China on Tuesday pledged to “fight to the end”, calling the escalation of tariffs “a mistake on top of a mistake”.
However, stocks in Hong Kong and China's main equity measure, the Shanghai Composite Index, swung from early losses to end the day with small gains. Hong Kong's Hang Seng Index moved 0.81 per cent higher, adding to a 1.48 per cent rise on Tuesday. Stocks in China ended trade with a gain of 1.16 per cent over expected support measures from the government, after the sovereign investment fund Central Huijin instructed state-owned companies to prop the market with share purchases.
China's vow to “fight to the end” probably includes “massive and unprecedented” measures to keep the economy afloat, including letting the yuan weaken to absorb part of the tariff cost, Ms Ozkardeskaya said.
The yuan dropped to its lowest levels since 2007 on Wednesday morning. “Expect rate cuts, liquidity injections and other measures to follow, one after the other, as China digs in,” she added.
India’s BSE Sensex Index dropped 0.75 per cent and Australia’s S&P/ASX 200 fell 1.32 per cent.
Not all Asian nations are retaliating against Mr Trump's levies. South Korea's acting president Han Duck-soo told CNN on Tuesday that his government will not fight against the 25 per cent tariffs announced. These could hit the country's export-led economy that sells brands such as Samsung, LG and Hyundai to American consumers.
“I think we should, in a very cool way, assess what this 25 per cent means for us, and we should, in a very cool way, negotiate with them,” Mr Han told CNN, adding that he had dispatched his trade minister to Washington.
Analysts expect global equity markets to remain volatile, with widespread selling pressure.
In the Middle East, the stock markets painted a mixed picture. The Dubai Financial Market General Index closed 0.05 per cent down, while Abu Dhabi's stock exchange gained 1.14 per cent. Saudi Arabia’s benchmark Tadawul Index closed trading at a loss of 1.82 per cent.
The Kuwait bourse was up 0.29 per cent and Bahrain closed down 0.16 per cent, while Qatar Stock Exchange climbed 0.08 per cent.
Oil market weakness
Oil prices, meanwhile, have continued their slide, nearing levels seen during the pandemic five years ago, on concern that retaliatory tariffs between China and the US could lead to a global trade war and hurt economic growth.
Brent, the benchmark for two thirds of the world’s oil, slipped 6.34 per cent to $58.84 per barrel at 4.15pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 6.68 per cent to $55.60 per barrel.
The trade shock, darkening economic prospects and spiking uncertainty are pressuring commodity prices, Julius Baer said in a note on Wednesday as it trimmed its oil forecast.
"Oil may trade around, if not below, $60 going forward, while safe-haven demand is adding a cyclical boost to gold’s central-bank-buying-driven record run," it said.
The oil market has been hit by a double whammy: the souring economy and the latest twists in oil politics as the "petro-nations announced plans to accelerate supply hikes next month" in a surprise move, which come on top of a deteriorating demand outlook, the bank said in a research note.
"We have trimmed our projections for oil demand and believe that US oil production and exports will become the main victims of rising global supplies and intensified competition for market shares. Both world oil demand and US shale output head for stagnation, if not decline, ending the US oil supremacy. Our view of an oil market heading into surplus seems confirmed."
Julius Baer maintained its 'Neutral' view but has cut its price forecasts to $60 per barrel on both a three-month and 12-month horizon.
The US has raised the average tariff rate on US imports from 2.5 per cent to 24 per cent – levels not seen since the 1930s and 1940s. Some analysts are predicting that a trade war will push the global economy into recession.
“These sharp increases [in tariffs] are expected to weigh on trade and economic activity globally, heightening uncertainty around the outcome of any forthcoming negotiations. The current environment also raises the risk of recession across major economies, including the US,” UBP said in its latest report.
Billionaire Ray Dalio, founder of hedge fund Bridgewater Associates, raised the alarm, saying the world is seeing a “classic breakdown” of the major monetary, political and geopolitical orders.
“This sort of breakdown occurs only about once in a lifetime, but they have happened many times in history when similar unsustainable conditions were in place,” he said in a post on X.
The years Ramadan fell in May
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Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
The five pillars of Islam
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
Zayed Sustainability Prize
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The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
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Zayed Sustainability Prize
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
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North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
MATCH INFO
Austria 2
Hinteregger (53'), Schopf (69')
Germany 1
Ozil (11')
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
It Was Just an Accident
Director: Jafar Panahi
Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr
Rating: 4/5
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The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
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