The meeting between Presidents Donald Trump and Xi Jinping lasted no more than 80 minutes, but nobody has an inkling of how much they spoke with each other before they met at the G20 Summit. Or did they at all?

After both parties last met, negotiations broke down resulting in the US imposing an additional 25-percent tariffs on US$300 billion worth of Chinese goods entering US soil. China retaliated by doing the same on US$60 billion worth of American goods sold to China.

Global stock markets plunged in the month of cliché “sell in May and go away”, only to rebound in the first week of June. Sensing signs that could augur well for the trade war such as when President Xi called Donald Trump his good friend on 7 June 2019 while Americans firms that were “forced” to cut ties with Huawei suddenly making public U-turns gave the stock markets hope. I found it positive enough to make a conviction call. 

The optimism could be further felt when a Chinese movie channel screened wartime love stories between an American soldier and a Chinese commoner. Trump also made a U-turn, from threatening added tariffs if Xi did not attend the summit to “it does not matter if Xi did not show up”.

The Good And Bad

We had a nice rally in June: the US market rallied, Hong Kong tumbled partly due to the protests while China, too, rallied. It looks like investors have more or less sensed the optimism and have bought into the stock markets before the G20 meeting.

No deadline set for negotiations More uncertainty
Huawei allowed to buy Huawei not removed from “Blacklist”
China bought 544,000 tonnes of soybean one day before meeting Unknown factor still remains on how much US wants China to buy. Sticky point
No threat of added tariffs Existing tariffs to remain
Did not mention Hong Kong


As usual, Trump loves to engage in rhetorical statements, painting a bullish picture of how the “outcome of the meeting was better than expected”, remarking that he had “a tremendous relationship with Xi, calling Xi a brilliant leader and man” and also naming the Chinese President as one of the best leaders China has had in the last 200 years.

Despite waxing lyrical about how great President Xi is, Trump is also well known for being extremely flippant and volatile.


Although no deadline was set for the negotiations to end and that there was an absence of threats for further punitive actions on China i.e. No new tariffs on US$300 billion of Chinese goods, we know that Trump can change his stance very quickly. The fact that existing tariffs would remain was a bit disappointing for me, as I had expected this. Perhaps this will happen and that would signal the receding threats of the trade war.

This sort of uncertainty created by more negotiations is what we will probably face when the stock markets open for trading on 1 July – the start of the second-half of 2019. Be prepared for more rollercoaster rides much akin to what we experienced in the first half of the year.


China bought 544,000 tonnes of soybean from the US a day before the two presidents met. This is probably a show of sincerity on the part of China that could have led to Trump deciding unilaterally to allow US companies to sell to Huawei provided the sales did not breach national security. The purchase is also in line with China’s promise to reduce the trade imbalance.

But what is national security and national interests to the US? And why did Trump insist that the decision on whether to take Huawei off the Commerce Department’s entities list (blacklist) would be decided after the end of the trade war. Is Trump telling us that Huawei will always be a threat? Seems like the case.

Investors will react positively to news that Huawei’s suppliers will no longer suffer from the loss in revenue. Chip suppliers such as Intel, Xilinx, Broadcomm and Qualcomm are likely to benefit and so will AEM – the SGX-listed service provider to Huawei.


Trump has probably realized that China’s outreach to countries such as North Korea and Russia – traditional adversaries of the US – do not benefit the US. The Chinese are playing the “enemy of my enemy is my good friend” card so it will be foolhardy for Trump to fight the war on too many fronts with China. Trump did not talk about Hong Kong, which is a good move, and has suspended arms sales to Taiwan.

Trump is running out of time, as I have written on social media. 

Stock Market

While there are reasons for the stock market to cheer about, the main beneficiaries are likely to be the selected tech stocks that I mentioned. The overall market looks good for a rally but the uncertainty of a prolonged negotiation and possible hiccups could limit gains and subject the markets to plenty of volatility.

We are making baby steps towards a good close for the year. Things do look good for the final six months of the year but do not expect the indices to travel in a rapid manner towards the north. 

Gabriel Gan was a Senior Vice President at AmFraser Securities. He left to join DMG Securities (now renamed as RHB Securities) to take on a similar role. During his stints at the stockbroking firms, he dealt in equities, performed advisory role and executed corporate finance deals for his clients.

Since 2001, he has been invited by the media (both Mediacorp and SPH) for his stock market opinions. On radio, he spoke on 95.8FM for more than a decade; he now speaks every Wednesday and Thursday mornings on SPH radio 96.3 FM, delivering his opinion in Mandarin. On TV, Gabriel appeared on Channel NewAsia, the former Channel U and various Channel 8 financial segments including Good Morning Singapore, Hello Singapore and MoneyWeek. On print media, he continues to give quotes and comments on the economy and stock market for Lianhe Zaobao, Lianhe Wanbao and Shinmin Daily. On top of that, Gabriel was a columnist for the now defunct My Paper.

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