2019年11月18日星期一
 
專家論市
Martin Hennecke

Trade deal is no panacea for world's woes
 
14/10/2019
 
<p>Before I pick up from where I left off on the issue of GDP, let&#39;s examine the partial trade deal that has just been struck between China and the United States.</p><p>In my column of September 9, I said that we might see a partial solution to the Sino-US trade war by the fourth quarter of the year, and as I had predicted, the first phase of a deal was announced by US President Trump on Friday.</p><p>However, we should not be too surprised nor too excited over the deal, as both China and the US needed it.</p><p>The reason for China wanting the deal is very simple: its economy is facing downward pressures and is at a critical juncture. Though many overseas enterprises don&#39;t want to pull out of China, due to the country industrial productivity and huge spending power of its consumers, the increase in tariffs on Chinese goods imported by the US will hurt China&#39;s industrial production.</p><p>At the same time, if China continues to respond to America&#39;s actions, the price of imported goods will also rise due to tariffs, and its consumer market will be affected because of imported inflation.</p><p>In the end, China&#39;s economy will face greater pressures, which is not something that Beijing wants to see.</p><p>Meanwhile, the US too faces a lot of pressure. While the unemployment rate continues to fall, it does not reflect the real situation of the US economy, otherwise Trump would not be pressuring the Federal Reserve to speed up the pace of rate cuts.</p><p>Trump has been well aware of the problems facing the US economy and shortly after taking office he unveiled big tax cuts before starting a trade war in a bid to narrow the trade deficit and boost GDP.</p><p>But Trump appears ready to compromise and strike a full or phased deal with China as he finds his actions have failed to generate momentum for the economy.</p><p>But can trade deals solve economic problems? This question has been discussed before. When all the major countries in the world have liquidity traps, aging populations and other problems, there are few ways to provide a lasting stimulus to the global economy.</p><p>A trade deal can provide some stimulus for financial markets, but for how long?</p><p>I would say six months. So if US and Chinese leaders sign the first phase of a deal in November, global markets could be in for a headlong rally up to next June - until everyone realizes that the global economy is dead.</p><p>If the global economy is doomed, why are China and the US still fighting for a trade deal? Well, Trump&#39;s reason may be as simple as trying to gain leverage in next year&#39;s presidential election.</p><p>Investors should cast their minds back to the beginning of 2007, when everyone was well aware that US subprime mortgage market would trigger an economic crisis. Why then, did a &quot;through train&quot; rumor cause Hong Kong stocks, which were headed below 20,000 points, to shoot up to 32,000? And why did US stocks, like Hong Kong stocks, crash in October that year?</p><p>Also, why has the Hang Seng Index not fallen below last year&#39;s lows despite so many negative factors in Hong Kong this year?</p><p>If global markets rise on the back of a trade deal, it might turn out to be a flash in the pan, but also an opportunity for a transfer of wealth.</p><p><em>Andrew Wong is chairman and CEO of Anli Securities</em></p>
上一篇新聞 : Stock rout fears grow as hope fades
 

 

 
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