Posted by: 8-12-2018, 05:31
Huawei again quarreled US and China
The stock markets did not have time to rejoice at the agreement reached between the PRC and the United States, as the top manager of Huawei was arrested at the request of the States. This should lead to a new spiral of tension between America and China, investors in the financial markets considered and hurried to sell off risky assets, and at the same time technological stocks, which naturally caused a wave of sales across all global trading floors.
Huawei Finance Director Mang Wanzhou was arrested in Vancouver on December 1 at the request of the United States, where top managers are suspected of violating US sanctions against Iran, Kommersant reports. Now she faces extradition to the States. This news caused a real shock in the markets: after the closing of the stock exchanges, the key US indices fell by more than 3%.
As a result, the Shanghai Composite fell yesterday by 1.7%; the Hong Kong index of shares of manufacturers of technological equipment — by 3.5%, and the sub-index of shares of technology companies — by 4.4%. From Asia, the sale has spread to Europe, where by 17.14 Moscow time the composite index EuroStoxx 50 fell by 2.64%, updating it in at least two years.
Trading in the United States itself began with the fall of the S & P500 by 1.3%, which, after a few hours, accelerated to 3%. The Dow Jones index fell by 600 points and almost updated at least since July.
Now the market is preparing for the pre-New Year rally, said Evgeny Udilov, an analyst at the Phoenix Institute for Trading and Investment. There will be so-called profit taking, ending the year’s history, any event can be the cause of sharp fluctuations in the exchange rate / stock / index. Yesterday, for example, we chose the situation with the Huawei manager, and today we are waiting for reports on production from OPEC in 2019 and Russia's opinion, eurozone GDP for the third quarter, release of data on employment in the US non-agricultural sector, and, of course, guess the situation with the top manager of Huawei.
If we consider the reasons for interest in relations between the United States and China, then, says Evgeny Udilov, on the one hand, economically, only China can be a threat to the United States, on a global scale. But, on the other hand, the trillions of dollars in the gold reserves of China are still in the obligations of the United States. Here, as the saying always works, «If I owe you a ruble, this is my problem, and if I owe you a million, this is your problem.» The share of US securities in China's gold reserves is the problem of the United States or China? In financial markets, they are trying to take into account all factors of pressure on the future and secure existing profits, therefore at the end of the year there may still be large-scale sales of the stock market and the foreign exchange market.
Confirmation of the logic that the start of the Christmas rally is a nuance that the stock market fell very atypically yesterday and the dollar fell, the analyst indicates. Cryptocurrencies became cheaper, protective gold / Japanese yen / Swiss franc rose sharply (against the background of the dollar, this is normal) — but then they worked back the yen and gold. Frank was left without additional speculation of the second half of the American trading session. That is, in addition to strong speculations on the stock market, within the day, the protective assets were hooked.
For the Russian currency there are plenty of other reasons for being under pressure, says Evgeny Udilov. One of them is the upcoming release of the OPEC mining decision for 2019. If it is speculative to estimate the prospect of falling, then today the losses of Brent may amount to 5-10%, which from the current 59.3 dollars promises a move down by 56.3-55.3 dollars. This will certainly affect the sale of the ruble.
Meanwhile, if the top manager of Huawei is handed over to the US authorities, Washington will have an additional lever of influence on the PRC, said Fadin Finance IR senior analyst Vadim Merkulov. According to him, the United States and China will settle this issue, as it happened during the conflict with ZTE, but the price that China will pay and Huawei representatives will be higher. A possible penalty from the US authorities could reach $ 3 billion, and how the arrest will affect the negotiations to resolve the trade war is still difficult.However, this will not be fatal both for the company and for the country — this could be a key reason for agreeing, despite a clear bias in favor of the United States.
As a result of falling markets for two days from December 4, a unique opportunity is now provided for investors to consider American for medium-term investments, the analyst is sure. The spread between two and ten US bonds dropped to 12 points, but there is no obvious driver for the fall. If the two largest economies agree. This will cause a positive reaction from investors. I expect that the S & P500 will update a maximum within six months, but we cannot exclude lateral movement.
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