Sophie Altermatt (Economist, Julius Baer) | The Chinese economy went through an impressive recovery in the second quarter and grew 3.2% compared with the same period a year ago, demonstrating a textbook V-shaped recovery. The return to growth was led by the production side and was driven by catching-up effects, pent-up demand and government support after the fallout in the first quarter due to the impact of the Covid-19 crisis.
Mainfirst |The January outbreak of the coronavirus pandemic in China had a severe impact on the Chinese real estate market, compared to 2019, property sales in February 2020 dropped by 65 percent. The market has now almost recovered from this. This is due to both the special features of the Chinese market and government intervention. Chinese real estate sales have been on the rise since March and April and are now already back to 80 percent of the previous year’s level.
Alphavalue | The answer to this complex question is yes. Our analysts believe there is a limit to central bank intervention. This is not determined by economic or financial rules, but by politics. Ignoring that limit would violate democracy. The next question is: have some central banks already crossed the limit?
François Rimeu (La Française AM) | Let us consider some of the main features of Joe Biden’s project: raise taxes on corporations, from 21% to 28%, and wealthy households; increase the minimum wage (from $7.5 to $15 an hour); provide $1,700bn in funding for infrastructure and Green New Deal. In the event of a Biden win, there would no doubt be less political tension across the world, which would be positive.
Mobin Tahir (Wisdom Tree) | The S&P China 500 Index is up 17.7% and the CSI 300 Index is up 16.8% year-to-date.Breakneck gains in stock markets create excitement, but also raise fears of bubbles. There are good reasons for the strong ongoing rally in Chinese equities, and – although risks lurk on the horizon – we aren’t in bubble territory.
McDonald’s was born in 1948, after the crisis following the US government’s demobilisation from the war economy. Airbus, Microsoft, and Starbucks were founded during the stagflation era of the 1970s. Firms that are able to adapt and grow in difficult times often present attractive long-term investment opportunities. Which companies will become market leaders after the Covid-19 crisis?
BofA Global Research | Merger and acquisition (M&A) activity in the global gold sector “heated” up in Q2’20 with twelve transactions announced (highest quarterly total since Q4’12) with a total transaction value of $2.86 billion, nearly double that in Q1’20. Historically global gold sector M&A activity heats up during times of buoyant gold prices. The “elephant-in-the-room” was SSR Mining’s friendly $1.71 billion all share merger with Alacer Gold on May 11 2020. The remaining eleven transactions ranged in size from $27mn to $238mn.
Trinh D. Nguyen (Natixis) | Here comes the good news: emerging Asia is turning the corner and on its upward trajectory in terms of growth in H2 2020. But increasingly, the pace of recovery from the trough is much slower for some and faster for others, creating widening divergence in emerging Asia. China, Vietnam, Malaysia, and the Philippines to a lesser extent, have shown a rapid rebound from their trough, based on the latest June manufacturing data. Other indicators such as retail sales also confirm this. That said, Indonesia and India are still struggling as the recovery is more sluggish and in contractionary territory. Singapore and Thailand are also lagging but have more buffers to offset drag.
James Reilly (Schroeders)| The current coronavirus crisis appears to be a rather potent cocktail of all three of these events: a viral epidemic more widespread than SARS, an economic downturn sharper than the GFC, and a fear of flying comparable to the aftermath of 9/11. This points to a trough far greater than the 45% downturn in international travel seen nine months into the GFC.
John Whittaker (The Conversation) | MMT proponents argue that governments can spend as necessary on all desirable causes – reducing unemployment, green energy, better healthcare and education – without worrying about paying for it with higher taxes or increased borrowing. Instead, they can pay using new money from their central bank. The only limit, according to this view, is if inflation starts to rise, in which case the solution is to increase taxes.