Politiske begivenheder dominerer i denne tid de finansielle markeder, f.eks. med valget i Taiwan og begivenhederne i Iran, og i denne uge kommer første del af handelsaftalen mellem Kina og USA.
Uddrag fra ING:
Politics are dominating the markets. The starting point for this analysis should be the Presidential (and legislative) elections in Taiwan, which saw incumbent Democratic Progressive Party (DPP) President, Tsai Ing-wen win a convincing victory at the weekend.
In a forthcoming note by our Greater China Economist, Iris Pang, Iris notes that the troubles in Hong Kong have probably galvanised nationalist spirit in Taiwan, and she goes on to note that so far, economic policies such as those aimed at bringing high-tech production back to Taiwan from Mainland China have not yielded much substance yet, though they have pushed up inventories and boosted land sales.
Bloomberg News reports in a story today that in their view, the result pushes Mainland China’s one country, two systems solution for Taiwan further out of reach. In any case, we don’t see the outcome having much bearing on the domestic Taiwanese economy, not that such matters seem to be that important for markets in this age of money printing.
Trouble in Tehran
Meanwhile, the downing of a passenger airliner in Tehran last week has taken a new twist with the Iranian authorities admitting that this was the result of a missile fired in human error. It’s not clear if this should be read as a positive shift from political lies to honesty, or as some other newswires are reporting, to outrage at the killings. Anti-government protests in Tehran are underway, but the threat to global oil supplies from any of this is small, given existing US sanctions, and would only really spell trouble in the event that a messy regime-change and a power-vacuum led to internal conflict spilling over into the region. We are way off this yet, and energy benchmark indices seem fairly relaxed for now.
Get out the ceremonial pens
This Wednesday, China and the US are due to sign the phase-one trade deal, which should make for a nice photo-shoot. But besides the prospect that the deal will contain far more substance than we are crediting it at this stage, the likely impact of the signing will be very limited, if any.
What pundits are wondering, is not when or if a phase 2 deal will be struck. I think most analysts, including myself, don’t expect to see any further trade deal either side of the US Presidential election, but certainly not this side.
The thornier problem is whether China will actually deliver on what sound at this stage to be fairly “wishy-washy” commitments on things like intellectual property protection. The US maintains that the provisions China will sign up to are enforceable, but this remains to be seen. A plausible scenario in my view is that cracks in this deal begin to spread mid-year ahead of the US elections and that tough trade talk could return ahead of the November election raising tensions once more.
That makes USDCNY a two-way bet over the coming 12 months, though the current trend for CNY strength remains intact and should continue for the time being.