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In-depth: Global market wrap-up
1 Views • Sep 30, 2019
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And for that, I'm joined on the line by Dr. Hwang Seiwoon, research fellow at the Korea Capital Market Institute.
Dr. Hwang, thank you for coming on today.
Thank you.
Bloomberg reports that the Trump administration is looking at ways to limit investment in Chinese companies, possibly by delisting them from American stock exchanges. The Treasury Department says it's not look at that option "at this time." What effect has this had on the stock markets?
U.S. stocks finished the week lower after reports that the White House is considering limits on U.S. investment into China, aggravating the protracted trade dispute between the globe’s two largest economies. Trump administration officials are discussing ways to curb U.S. financial exposure in China, including a block of all American investment in China and Chinese listing in American stock markets. As a result, the Dow erased a gain of about 130 points after the report and closed down 70 points. The S&P 500 also reversed all of its morning gains to finish down 0.53%, while the Nasdaq lost 1.1%.
Asian stock markets showed mixed price movement on Monday. Worries such an escalation in the trade friction would hurt Japan the most weighed on the Nikkei, which lost 0.45%. South Korea’s KOSPI gained 0.38% today, shrugging off news that the U.S. administration is considering delisting Chinese companies from U.S. stock exchanges. Trading in Chinese markets was quiet ahead of a long break, which runs until Oct. 7.
We've talked about a U.S.-China war in trade, then currencies if it becomes a financial war, what would that do to the global economy? Would that essentially derail the talks?
It is argued if Trump’s new plan to restrict the investment is a negotiating tactics to pile pressure on China to make concessions in its trading relationship with the U.S., ahead of talks scheduled for mid-October in Washington D.C to resolve the two year old dispute.
Investors are also concerned if it is a symptom of a possibly multi-year struggle between China, as a rapidly rising new economic and military superpower, and America, in its determination to maintain control of the international economic order it helped create after World War Two.
It is more reasonable to recognize Trump’s new plan as a harbinger of a long term struggle. The financial sector is very likely to be a final battle field between the U.S. and China. The U.S. has comparative advantage over China in financial sector, and thus will keep trying to move its negotiation area to financial sector. However, China would strengthen its defense by opening its financial markets slowly. This implies that the new plan is more likely to intensify the struggle and it could take longer for the two to reach an agreement.
Now, domestically in Korea, we'll see earnings this week from Samsung Electronics. We've also got parliament due to question the government about the economy and its policies.
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