Five Things You Need to Know to Start Your Day
The U.S. and North Korea nail down a venue for next week’s historic summit, Wall Street isn’t afraid of emerging markets, and Carson Block calls out Chinese companies listing in the U.S. Here are some of the things people in markets are talking about.
Trump, Kim Have a Venue
President Donald Trump and North Korean leader Kim Jong Un will hold their historic Singapore summit at the Capella Hotel on the city-state’s Sentosa Island, White House Press Secretary Sarah Huckabee Sanders said Tuesday on Twitter. The two leaders plan to start their meeting at 9 a.m. Singapore time on June 12. Air China is planning to resume regular flights between Beijing and Pyongyang after a six-month hiatus, in the latest sign that the “maximum pressure” campaign on North Korea may be easing.
Wall Street Says Don’t Fear Emerging Markets
There’s a growing chorus on Wall Street saying its time to get back into emerging markets. Goldman Sachs says fundamentals in developing economies are mostly intact in the wake of the recent stress test from higher U.S. interest rates, a rally in the dollar and jump in oil prices. Morgan Stanley concurs, highlighting that real interest rates are higher, inflation is lower and current-account balances better in most major emerging markets than in 2013, with the exception of Turkey and Argentina. Citigroup also considers them better equipped to ride out bouts of volatility.
Stocks Sputter, RBI Awaits
The global rally in risk assets that propelled U.S. stocks to a 12-week high sputtered on Tuesday, with the S&P 500 swinging between gains and losses before closing higher for a third consecutive day. Advances in megacap tech shares helped support Nasdaq indexes, pushing them to fresh records for a second-straight day. Italian bonds tumbled after the nation’s premier pledged a raft of populist measures. Crude oil reversed early losses to close higher for the first time in four days, while the dollar also gained. Coming up, the Reserve Bank of India is expected to hold rates unchanged at 6% on Wednesday, while Australian GDP and Japanese wage growth data for April await.
Standard Chartered Plans Dual Asia Hubs
Standard Chartered plans to create two new hubs for its Asian operations in Singapore and Hong Kong to simplify the emerging market lender’s extensive network and reduce costs, people familiar with the plan said. The bank has drawn up plans to consolidate as many as 10 Southeast and South Asian countries -- potentially including Indonesia and India -- under a new Singapore subsidiary as soon as next year. It’s intended to allow the bank to manage its assets and capital more efficiently and could potentially reduce the size of the emergency buffers regulators require the firm to maintain. It’s also consolidating some non-China North Asia countries into a separate Hong Kong subsidiary.
Carson Block Warns on Chinese Companies (Again)
Fraudulent Chinese companies pose a risk to U.S. markets and investors should consider the nation’s equities "sin stocks," said short-seller Carson Block. "I don’t think there’s any parallel in the history of capital markets where you’ve had this systemic issue of literally hundreds of frauds going to another country’s capital market to suck up capital and expatriate it to their home country," Block said at the Bloomberg Invest conference in New York Tuesday. He urged asset managers to approach Chinese companies as they do sin stocks – asking whether it’s something they should own. “In China, there is no such thing as a purely private company,” he said. “The private companies will do the bidding of the state when they are required to do so."
What we’ve been reading
This is what caught our eye over the last 24 hours.
- China has offered to boost purchases of American goods by about $25 billion.
- ZTE is said to sign an agreement in principle to lift ban on buying from U.S. suppliers.
- Malaysia’s central bank governor offered to resign, people familiar said.
- Australian prosecutors charged the former local heads of Citigroup and Deutsche Bank with criminal cartel offenses.
- LeBron James is a player in the U.S.-China trade spat.
- Why Trump’s trade war isn’t worrying economists – yet.
- China’s Sunny Optical has made millionaires out of factory workers, janitors and cafeteria chefs.
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