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Asia stocks fall as China warns against Nancy Pelosi visit to Taiwan

Asian stocks fell as US House Speaker Nancy Pelosi’s expected visit to Taiwan raised the prospect of an aggressive response from China’s military.

Hong Kong’s Hang Seng fell 2.7 percent on Tuesday, while China’s CSI 300 index of shares traded in Shanghai and Shenzhen fell 2.5 percent. Both Taiwan’s Taiex and Japan’s Topix shed nearly 2 percent.

Concerns about a potential crisis in the Taiwan Strait also led to an increase in haven assets, with Japan’s yen is climbing 0.7% to ¥130.73 against the dollar, the highest level in two months.

The sell-off of stocks across Asia came as Flossie prepared to meet Tsai Ing-wenTaiwan’s president, on Wednesday in what would mark the most senior visit by a US lawmaker to the country in 25 years, despite increasingly strident objections from Beijing.

Chinese Foreign Ministry spokesman Zhao Lijian warned this week that “the Chinese People’s Liberation Army will not sit back” if Pelosi continues the visit.

On Monday, China Conduct live fire drills on an island in the Taiwan Strait, with the China Maritime Safety Administration promising more drills from Tuesday to Saturday.

John Kirby, the head of communications for the US National Security Council, said that China “appears to be positioning itself to take further steps in the coming days”, including “military provocations, such as firing missiles in the Taiwan Strait”.

Although Pelosi did not at all Taiwan On her official itinerary for a wider visit to Asia this week due to security concerns, three people familiar with the situation told the Financial Times that the speaker will meet Tsai in Taipei tomorrow.

Traders said there was no immediate fear that China would take any action that would oblige it to invade the self-governing island, but the timing of the visit, ahead of the 20th Congress of the Chinese Communist Party this year, prompted a stronger reaction. From Beijing is almost inevitable.

“The sale reflects concerns about a potential conflict,” said Louis Tse, chief executive of Wealthy Securities in Hong Kong.

Tse said Chinese President Xi Jinping, who is hoping to secure an unprecedented third term at the upcoming party congress, is under pressure to prevent Pelosi’s visit to Taiwan, which Beijing claims sovereignty over.

“And if Pelosi visits Taiwan and spurs a strong response from the Chinese military, that could cause another selloff,” he added.

Stock futures indicated that concerns about a potential geopolitical crisis in Asia were not weighing on stocks as much elsewhere, however, with the S&P 500 tipped to drop just 0.4%, while the FTSE 100 was expected to drop 0.7% at the London opening.

Asia stocks fall as China warns against Nancy Pelosi visit to Taiwan Source link Asia stocks fall as China warns against Nancy Pelosi visit to Taiwan

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