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Asian Markets Mixed; China Think Tank Warns of Potential ‘Financial Panic’

Asian markets were mixed in afternoon trade – Asian markets were mixed in afternoon trade on Thursday as markets digest the latest developments of the on-again, off-again U.S. trade tensions with key partners.

Meanwhile, a Chinese government-backed think tank has warned of a potential “financial panic” in a leaked report.

The National Institution for Finance & Development (NIFD) of China said leveraged share buying have now reached levels that was seen in 2015 when a market crash erased $5 trillion of value.

"We think China is currently very likely to see a financial panic,” NIFD said in the study, which appeared briefly on the internet before being removed. “Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.”

China’s Shanghai Composite slipped 0.1%, while the Shenzhen Component climbed 0.5% by 1:30AM ET (05:30 GMT). Hong Kong’s Hang Seng Index also edged up 0.2%.

The markets were under pressure after U.S. President Donald Trump’s top economic adviser Larry Kudlow said on Wednesday that the president is not retreating on China, although Trump’s plan to crack down on foreign investment is less harsh than many had expected.

The White House announced that it would not be looking to impose the new 25% new limits on Chinese ownership in U.S. tech-related companies, as reports had suggested earlier in the week. Instead, the government would rely on the newly strengthened Committee on Foreign Investment in the United States, or CFIUS, to deal with concerns.

Meanwhile, Treasury Secretary Steven Mnuchin said all of President Trump's advisors were unanimous on the newly unveiled Chinese investment restrictions, which was announced Wednesday morning.

“We are going to treat China the way we are going to treat other people,” Treasury Secretary Steve Mnuchin told reporters. “And to the extent that we were worried about transactions, we will block them. But we are not going to on a wholesale basis discriminate against China as part of a negotiation."

Elsewhere, Japan’s Nikkei was unchanged at 22,270 in afternoon trade. Official data showed on Thursday that annual growth in Japanese retail sales slowed to a 0.6% increase in May, its lowest in seven months. The growth was than the median estimate for a 1.3% gain.

Down under, Australia’s S&P/ASX 200 edged up 0.3%.

New Zealand's central bank kept interest rates steady at 1.75% on Thursday, reaffirmed market expectations that no rate hike was on the near-term horizon.

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