Five Things You Need to Know to Start Your Day
Question marks hang over Hong Kong’s capital outflows, Duterte brings up past quarrels with China, and Apple finally sets its eyes on India. Here are some of the things people in markets are talking about today.
Hong Kong’s summer of unrest has increased the stakes for investors there by pushing economy toward a recession, and doubt is circling about the city’s future as a finance hub. With one of the world’s most open economies, Hong Kong has bank assets equal to about 8.5 times of its GDP and offshore traders account for about 40% of volume on the city’s stock market, so the withdrawal of deposits and investors would hit hard. So far, trends are showing slight changes across the various metrics. Take a look at those here.
China Sea Spat
Philippine President Rodrigo Duterte will meet Xi Jinping on Thursday, and the “first thing” he says he’ll bring before the Chinese leader is the 2016 international ruling that invalidated some of Beijing’s claims in the South China Sea. Duterte had set aside the Philippines’ 2016 tribunal win against China previously to warm ties between the two countries — and tap Chinese funding — but now oil exploration of the disputed areas is on the Philippine leader’s agenda. But if Duterte decides to play his ace card, he may be shooting himself in the foot by validating China’s sea claim in the first place, says one researcher.
Asian stocks look set for a muted open as the world waits on new developments in the increasingly unpredictable Sino-American trade war. U.S. stocks closed near session highs Wednesday amid light trading. Futures nudged higher in Tokyo and Hong Kong, and dipped in Sydney. The S&P 500 Index climbed on below average volume as a rally in oil pushed energy shares higher, and while the dollar strengthened to a nine-month high, Asian currencies were little changed after Treasury Secretary Steven Mnuchin said the U.S. doesn’t intend to intervene on the dollar for now. Meanwhile, the bond rally continues unabated, with the yield on 30-year U.S. Treasuries sinking to a record low of 1.90%. A bigger-than-expected drop in American crude inventories sparked oil gains, strengthened by Iran when they all but ruled out a U.S. meeting.
Apple in India
Apple has an insignificant share of the India’s booming smartphone market, thanks to its high prices and hefty import tariffs — but that could all change now. After India eased rules on Wednesday that forced companies to source 30% of their production locally, Apple is poised to start online sales of its devices within month’s in the world’s fastest-growing smartphone market, a person familiar with the matter said. With escalating trade tensions damaging ties between the U.S. and China, New Delhi’s latest investment rules could provide a boost to Apple, allowing it to grow sales in the country and possibly help it reduce its high dependency on China by building out an alternative supply chain in India.
U.K. Parliament Suspended
The chances of British Prime Minister Boris Johnson coming good on his ambitious promise to fast-track Brexit just started looking much better. In another dramatic turn of events, the Queen granted the new Prime Minister permission to suspend Parliament on September 12th, effectively giving Johnson invaluable time to return with a new legislative program a month later. That’s set the clock running for his opponents to thwart him — they only have two weeks to craft a law to stop Britain leaving the EU on Oct. 31 without a deal. The question now: Can they do it in time?
What We’ve Been Reading
This is what’s caught our eye over the weekend.
- Steve Mnuchin says China trade meting will happen but won’t say when.
- Elon Musk and Jack Ma will debate AI at a summit in China.
- Italian yields tumble to record low amid election talks.
- The Big Short’s central figure, Michael Burry, is seeing a bubble in passive investing.
- A tiny, young, nation needs gas, and China’s only too eager to help.
- More Americans are blaming Trump for the declining economy.
- Costco has had to cap the number of shoppers in China to 2,000 after a “crazy” debut.
©2019 Bloomberg L.P.