Market Round Up: China riding a black swan ☁ – Tech stocks ying and yang 🙏

by | 12 Sep, 2018

 

1. China riding a black swan

Okay, so China doom-sayers last week got it slightly wrong. Export growth may have dropped, but only slightly. Factory activity slowed and consumer inflation was up, but not significantly. But still, risk factors loom large.

At last week’s meeting of the Financial Stability and Development Committee, the key topic for discussion was a “Black Swan” scenario, a term created by Lebanese-American scholar Nassim Taleb, where an extremely rare and unpredictable economic event arises. President Trump’s threat of all out tariffs on all Chinese imports is one such wild card. Which is why the committee meets on a monthly basis to check the state of its economy and to recommend needs for any reforms.

Losing multi-billion dollar export trade with America is seen as a ‘trivial’ concern as China can look to do deals elsewhere. However, this wouldn’t resolve their problem if the trade conflict impacted the overall global economy. Then, other markets will not be in any position to buy or, as part of the Belt and Road and Made in China 2025 initiatives, borrow funds and goods from China.

The sad fact is that the trade war is a partisan issue, used by both sides to fuel domestic political compulsions. So neither side will back down, with serious and inevitable repercussions for all. The black swan may become a flight or gulp of black swans – as they are known collectively.

Related:  Market Round Up: China warms up cold Turkey, Restaurants starved by buybacks, Euro is all Greek to me

 

 

2. Tech stocks’ ying and yang 

You’d think that tech stocks all over the world would be in synch in terms of price movement. Either fickle investors love the sector, or they don’t. And when the risk of rising trade barriers continues, you’d think they’d all be on a downer.

That may be true for the big Asian tech stocks. Fearing the uncertainties driven by the tit-for-tat trade battle, investors in stocks such as Tencent and Alibaba appear to be, while not quite running, at least strolling for the hills to reach safer ground. And where is that safe ground? Mostly NASDAQ, the U.S. tech stock exchange.

Related: Market Round Up: Imran Khan’s sticky Pakistan wicket, Tech stocks’ rout, Boring Billionaires

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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