Asian stock markets slightly up in the superweek start

The Asian stock markets started this superweek with causious actions. The stock markets were slightly up and for example the Hang Seng index was up 0,3 % in Hong Kong, Shanghai Composite 0,1 % and Nikkei 0,35% in Tokyo. The yen was trading at 108,63 dollars and euro 1,1054 dollars.

This week will be a superweek due to several central banks rate decisions, UK´s Brexit vote and for example the trading start of the Saudi Aramco oil company.

According to the morning Financial Times, China has ordered all government offices and public institutions to remove foreign computers and software within three years. According to the news the aim of the directive is to switch to domestic technology vendors and increase the domestic home-made technologies in the markets.

In the trade policies this is seen as an action against the US Administration to ban the US companies to deal with Chinese telecom company Huawei.

The US and China are expected to reach a Phase 1 trade deal by the end of this year. On the other hand the US new tariffs in the China trade will come into force on Sunday, the 15th December, if no new deal is reached. The recent exports/imports data between the countries show that the trade has been slowing in China exports in November.

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Fed added 70 billion dollars into markets – digital money on agenda (updated)

Updated: The Japanese stimulus package

The US Federal Reserve has added 70 billion dollars to the financial markets on Wednesday, the Wall Street Journal writes. According to the news, the central bank made the intervention using overnight repurchase agreements, repos. The aim is to ensure that the financial system has enough liquidity.

The financial and banking markets have been in turmoil due to the negative rates, global growth concerns and new technology. And during this week, the European Central Bank, said it is now considering to launch its own digital currency if the private sector cannot make cross-border payments faster. According to Bloomberg, the central bank wants the transactions also more cheaper.

This would be somewhat similar what the US Federal Reserve Bank said four months ago. According to Fed, the central bank is developing a new service called FedNov that would allow all banks in the US to offer real-time payment services every day of the week. FedNow was estimated to be available by 2023 or 2024 and it is expected to help the small & midsize companies and households to better balance their transactions.

The digital currency on the other hand would then be rival for example to Facebook´s Libra project which has caused several privacy and legacy issues by authorities globally and the tech giant has said it is postponing the digital currency project in order to meet the regulatory requirements. But there are also other digital bitcoin currencies as well and China has expressed their interest to evaluate the new money in its own financial markets systems for example in the stock markets.

The banking industry play field has also changed in Europe due to the UK departure of the Union. The Brexit has caused some international banks to relocate their services also in the EU area in order to continue to service as full potential.

This in turn has caused that the big US securities companies like Goldman Sachs, JP Morgan and Morgan Stanley are now under the European Central Bank´s supervision of their European operations.

This larger regulation scope will increase also the impact of the ECB and its decisions from now on. ECB is then becoming a new power house in the financial industry. This is also good to remember when the EU-countries are calling ECB to stop the asset purchase programme or the stimulus packages.

What is the role of the ECB in the future, will be in the hands of the new Central Bank President Christine Lagarde. Will ECB defend its independence to ask governments to increase their fiscal spending and thus increase the needed economic stimulus in the Brexit and trade talks aftermath? And how the ECB is balancing the different economic outlooks in the euroarea for unite monetary policy? And what is the euro-strategy after Brexit?

The global trade tensions and trade concerns have caused for example Japan to make a new spending package.  On Thursday the PM Shinzo Abe launched the country’s first stimulus package since 2016 and the total amount of the package was about 121 billion dollars. The aim is to repair typhoon damage, invest in infrastructure and new technologies.

So, the central banks are watching. Will the economies survive?

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The competition of 5G is increasing in US, Asia and Europe

The rollover in the 5G networks has become a hot topic in the US, China and Europe. The competition of the leadership is increasing due to the market situation, standard setting and regulation. The hyped 5G is getting also comments related to ethics and good governance.

The speculations of global leadership in the 5G networks have been increasing due to the tensions between the US China trade talks and issues related to Huawei. The Chinese tech company was placed to black list by the US authorities due to the security concerns. The company has repeated that this is not the case.

Many market analysts say that the growth of the 5G investments will see the same kind of path as did the 4G. Others think that the path will be different due to the different applications the 5G is made for like the business to business applications. All agree that this game-changing technology, the 4th industrial revolution, will make the business difference.

The leadership talks is now between the US and China. It is expected that the Chinese markets will invest in the new technology 218 billion dollars during the years 2020-2025. This estimate from the China Internet Report also states that there would be 460 million 5G connections by the end of 2025. China has maintained the political ambition in the new technology.

Europe is lacking behind the 5G development about one year due to the lack of spectrum and the lack of integrated EU-tech strategy.

-5G delays in Europe are not tied to the choice of technology vendor. Europe instead faces a series of structural problems that hinder 5G development.  Some structural reasons for Europe lagging behind were the lack of spectrum and a dangerous “wait and see” approach to 5G among some regulators and service providers. The biggest roadblock relates primarily to regulatory policies.  5G must be viewed as a critical part of European national infrastructures.  This is not the case today, the Swedish company says.

The international 5G competition is also a question of the global standard and standard setting which normally have been in the interest of the European companies as well. But it is also questions of the good governance as related to the big tech companies recently over privacy, personal information and security issues.

The US Qualcomm CEO Steve Mollenkopf said in the Bloomberg interview on Monday that he thinks China is trying to create that standard and he sees that it is not only the China that is interested of the standard but also the other Asian countries like South Korea and Japan.

Regarding the competition situation Mr Mollenkopf commented that the only way the 5G is to be implemented is to co-operate with Huawei. According to him, it is the only way to make the 5G live in the world although there are some geopolitical tensions.

This new technology, 5G with high internet speed, enable the development of future sustainable cities, industries and homes with smart applications related to artificial intelligence, iOT and virtual reality.

The new network is needed in order to effectively take care of the future needs related to driving, health and security issues for example. So, it is also a question of confidence, trust.

There are different companies in the 5G supply chain to gain from the new technology. The network suppliers, semiconductors, mobile phone manufacturers and other vendors play a vital role in the development. For example one of the mobile phone makers, the US Apple, has said earlier that their 5G phones will be available in the late 2020.

For tech stock investments follow for example these companies for more information of the development: Apple (AAPL), Verizon (VZ), AT&T (T), Qualcomm (QCOM),  Alphabet (GOOGL), T-Mobile (TMUS), Sprint, China Mobile (0941), China Telecom (0728), China Unicom (0762), China Broadcasting Network, Ericsson (ERIC) , Nokia (NOKIA), Huawei, Samsung (005930), NTT Docomo (9437).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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US Trump to place tariffs on steel from Brazil and Argentina

The US President Donald Trump has said he will place tariffs on steel and aluminium imports from Brazil and Argentina. He commented the trade situation on Monday  before leaving for the Nato meeting to London. According to him, the weak currencies had made it harder for US food exports to compete.

The trade talks with China are also having delays due to the Hong Kong democracy and human rights bill the President Trump signed last week. According to him, the HK law have complicated the talks with China. China has said that the US Navy cannot enter the Hong Kong ports at the moment.

The city of Hong Kong also revealed some retail sales figures, which show the six months demonstrations have caused the city retails sales massive drops. For example the retail sales dropped 24,3 % in October, while the figures were – 18,2 % and -22,9 %  in September and August.

The trade talks with US China are having deadline next week on the 15th December before the new trade tariffs come into force. The US Administration has said that more tariffs will be placed if no deal is reached with China before the deadline.

Business Finance

China to allow wholly foreign-owned banks full-service licence – Xinhua

China is liberalising its financial markets further with the possibility of wholly foreign-owned banks to operate with full-service licence in China.  According to Xinhua News, Chinese Premier Li Keqiang commented the easing of regulation with the visit of the IMF new lead Kristalina Georgieva in Peking last week.

According to the news, China will maintain the basic stability of its currency RMB “at a reasonable and balanced level” and will not engage with competitive devaluation of the exchange rate.

According to IMF,  the Chinese government has “adopted a positive fiscal policy, carried out taxes and fees cut, implemented prudent monetary policy and supply-side structural reform”. The IMF said that all these efforts are to improve the country’s competitiveness in medium and long-term.

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WTO: China can levy tariffs of 3,6 billion dollars – SCMP

According to South China Morning Post, China can levy tariffs of 3,6 billion dollars in US trade. The WTO made its decision on Friday related to an old dispute from 2013.

This means that the ongoing trade discussions between the US and China, will get new tariffs elements.

The leaders of the two countries were about to meet in Apec meeting in Chile in November, but the cancellation of the meeting has made the process and new timetable unknown.

Business Finance

Volvo Cars and Geely to combine R&D and engine operations in electric cars

The new Volvo XC60

The Swedish Volvo Cars and its Chinese owner, Geely have announced a plan to combine their electric cars R&D and engine operations. The aim is also that the new unit will offer the services to other customers in the future. The change is part of the Volvo Car´s focus in electrification of its whole production.

This means that the companies intend to merge their existing combustion engine operations into a stand-alone business that will seek to develop next generation combustion engines and hybrid powertrains.

– The proposed new business would clear the way for Volvo Cars to focus on the development of its all-electric range of premium cars. Volvo Cars is building an entirely electrified product range, as part of the company’s ambition to put sustainability at the core of its operations. By the middle of the next decade it expects half its global sales to be fully electric and the other half hybrid, supplied by the new unit, Volvo said in its press release.

– For Geely, the planned new entity means technologically-advanced and efficient combustion engines and hybrid powertrains would be available to Geely Auto, Proton, Lotus, LEVC and LYNK & CO. The planned new stand-alone business can also supply third party manufacturers, providing possible growth opportunities, companies say.

The new entity will have 3000 employees from Volvo Cars and around 5000 employees from Geely´s combustion engine operations.

Volvo Cars believes the electrification of the automotive industry will be a gradual process, meaning there will be significant ongoing demand for efficient hybrid powertrains alongside fully-electric offerings.

-Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently, said Håkan Samuelsson, Volvo Cars’ president and chief executive.

The detailed plans of the new business are under development and subject to union negotiations as well as board and relevant authority approvals, companies say.

Volvo Cars is about to launch its first fully electric XC40 in October 16th. Later in October Volvo will also publish its Q3 report.

Picture: The new Volvo XC60 T8 R-Design in Crystal White

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