Magdalene Teo, Fixed Income Research Asia, Eric Mak, Equity Research Analyst Asia, Julius Baer │China has opted for interest rate reform (to be more market-oriented) instead of announcing a benchmark rate cut, so liquidity flow is more targeted to the segments that need it.
Shaun Riordan │ The Hong Kong protests have now entered their tenth week. Over the weekend protestors are reported to have fought running battles with the police in the Metro system. The police have had recourse to batons and tear gas. The dangers for Hong Kong´s political and economic future are clear. But the dangers are much broader than Hong Kong. Markets should be watching carefully.
Íñigo Isardo (Link Securities) | This week will be affected by the uncertainties of the trade conflict between the US and China after the latest “turn of the screw” introduced by US President Donald Trump into the trade negotiations. Last Thursday Trump announced on Twitter the imposition of 10% tariffs from 1 September on 300 Bn$ of imports from China which so far have not had to pay tariffs.
Manuel Moreno Capa (Director of GESTORES) | China already has its Nasdaq, its stock market for technology companies – the STAR index. Well, with certain differences: only 25 companies are listed on it, compared to the 3,000 listed on the Nasdaq. But it does not matter. The wind from the East blows hard and will drive technology funds, high risk products, but also with elevated potential returns in the medium and long term.
In February, acquisitions by Chinese investors in Germany reached a new dimension. A Chinese multi-millionaire has become the biggest shareholder in Daimler AG. The entrance of the influential Li Shufu into the world of Mercedes is proof of the scary Chinese presence in German companies (Deutsche Bank, the robots manufacturer Kuka and in many high tech firms).
“Competition is especially important for innovation and some of the big (US) companies also have a lot of power in the market…but it’s difficult to keep innovating.”
Unfortunately, the stakes are being upped in this strange and perverse game between Trump and Pyongyang, with increasing possibilities of China becoming involved. A war with North Korea cannot be ruled out.
With his policies, particularly protectionism, Trump is about to throw the US’ world leadership in the bin. He sold an illusion to his voters since the industrial jobs which disappeared with globalisation and technology will not return. What is clear is that the consequences will hurt us all.
We can expect a rise in interest rates in 2017, driven up by the Fed, but fuelled by doubts over Europe. And I would bet the dollar will appreciate against the euro and the yuan – and sterling – although I am not normally a betting man.
Peter Drysdale via Caixin | China has a lead role to play at the Hangzhou G20 meetings on opening up global trade, investment, deeper financial reform