Last week, there were two major occurrences in China and Hong Kong. First, the Chief Executive of Hong Kong Carrie Lam, formally withdrawn the contentious extradition bill. The other was the signal to the real cost of borrowing in Mainland China by Premier Li Keqiang during a state council meeting.
In an official meeting of China’s State Council, Premier Li Keqiang called for the Chinese cabinet to “timely” lower the real costs of borrowings. The Chinese government and central bank that usually heed such requests from the State Council, could ease its monetary policy soon.
Of late, stock market volatility seems to share a significant relationship with US President Trump’s flippant and mercurial nature. In the past few weeks, global bourses have seen stock prices have been on a rollercoaster ride. Amidst the fray, market veteran Dr. Chan Yan Chong has called for investors to put more emphasis on the US interest rate outlook, than on the debilitating US-China trade war.
From the latest official figures published recently, Singapore’s economic growth in 2Q19 was weaker than expected. Given the gloomy climate, some are now wondering if the Singapore government would call for an early election.
A day after the G20 meeting with China President Xi Jinping, US President Trump went on to meet his North Korean counterpart Kim Jong Un at the demilitarised zone in the Korean Peninsula. In the impromptu meeting with Kim, Trump made history when he became the first sitting US President to step into North Korea.
The US-China trade war is starting to bite in Singapore. Official figures showed that 1Q19 GDP has slowed significantly, with the retail sector still in contraction.
Just when the US intensifies its trade war against China, Trump announced that he would impose a five percent tariff on all Mexican goods on 10 June 2019. The move aimed to push the Mexican government to crackdown on illegal immigrants coming into the US.
On 10 May 2019, the US officially raised tariffs on US$200 billion worth of Chinese goods to 25 percent. Returning to his brinkmanship style of diplomacy, Trump once again threatened to expand the list to include all Chinese imports. At this moment, there is still US$325 billion worth of Chinese goods not being targeted. If tensions continue to escalate, tariffs could even be levied on American products manufactured in China, such as the Apple’s iPhone. So far, only pharmaceuticals and rare earth minerals are exempted.
Geopolitical risk has returned to take center stage.
My latest book “Chaos” has finally been published. Amongst the 50 odd books I have written, three books were dedicated to a detailed analysis of the stock market during different era.