Asia stocks flavour of the day: Davos with hint of growth worries

Tuesday marked the start of the World Economic Forum in Davos, where global leaders meet to discuss issues ranging from growth concerns to politics – subjects that have been of particular interest to investors lately.

And it looks like the timing was just perfect: the International Monetary Fund (IMF) cut its global expansion forecast on Monday, warning fresh trade tensions could spell further trouble.

The verdict today was clear, with the MSCI Asia Pacific Index losing 0.7%, heading for its biggest drop in almost three weeks. Markets from Shenzhen to Hong Kong, Tokyo and Mumbai were in the red.

While investors wait for more news on the US-China trade spat, the focus shifts to where there’s a confluence of some of the biggest names in both the political and investment worlds: Switzerland.

And this year’s summit is looking very different from 12 months ago.

At Davos, the comments are rolling in from some of the most influential. On the sidelines of the forum, Singapore’s Finance Minister Heng Swee Keat sounded a warning of a "very negative" outcome for the global economy if the US and China fail to come to an agreement on trade.

"Comments and talks at Davos would lead to more recognition of problems like what the Singapore minister said," Jingyi Pan, a market strategist at IG Asia Pte, said by phone.

"Urging from world leaders will help in forming consensus for faster resolution of trade issues between the US and China."

Growth jitters

The IMF’s latest warning came as yet another blow for investors, just hours after China released data showing its economic expansion in the fourth quarter was the softest since 2009.

"The IMF is on the right track here," Ajay Kapur, head of Asia Pacific and global emerging-market strategy at Bank of America Merrill Lynch, told Bloomberg Television.

"Things are really slowing down, confidence is terrible, earning revisions have collapsed, CFO confidence has collapsed and this is not a time to sit back and observe."

At an unusual meeting of the nation’s top leaders on Monday, President Xi Jinping said the Communist Party needed greater efforts "to prevent and resolve major risks," the official Xinhua News Agency reported, a fresh sign the government is growing increasingly concerned about the pace of growth.

"Concerns over slowing global growth are starting to filter through to financial markets," Nick Twidale, chief operating officer at Rakuten Securities Australia Pty, wrote in a note to clients.

While the trade war and global economy are casting a pall over proceedings in Davos this year, our Bloomberg Markets Live blog is looking ahead and posing the question: What Will Be the Focus This Time Next Year? Top candidates include the possibility of a US recession, the fate of the UK and whether the largest central banks will see easier monetary policy.

Or, we could all still be talking about the US-China trade war. Even money.

Stock-market summary

Japan’s Topix index down 0.6%; Nikkei 225 down 0.5%. Hong Kong’s Hang Seng Index down 0.7%; Hang Seng China Enterprises down 0.9%; Shanghai Composite down 1.2%.

Taiwan’s Taiex index little changed South Korea’s Kospi index down 0.3%; Kospi 200 down 0.5%.

Australia’s S&P/ASX 200 down 0.5%; New Zealand’s S&P/NZX 50 down 0.4%.  India’s S&P BSE Sensex Index down 0.5%; NSE Nifty 50 down 0.5%.

Singapore’s Straits Times Index down 0.8%; Malaysia’s KLCI up 0.6%; Philippine Stock Exchange little changed; Jakarta Composite up 0.3%; Thailand’s SET up 0.5%; Vietnam’s VN Index down 0.5%.

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