There was good news for investors as both the US and China made peace-making gestures to ease an already bruising trade war.
China will exempt some agricultural products from the additional tariffs on US goods and will renew the purchase of US farm goods. China has bought US pork despite a 62% tariff imposed on pork since last year.
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Meanwhile, the US will delay a tariff increase on certain Chinese imports. President Trump tweeted on Wednesday that he will hold off on the 5% increase in tariffs on certain Chinese goods until October 15 from the original date of October 1. This was out of respect for the 70th anniversary of the founding of the People’s Republic of China.
The US is calling for China to end what they believe to be unfair practices such as intellectual property theft, industrial subsidies, currency manipulation, and forced technology transfer.
The Hong Kong Exchange (which had a US$39 billion offer to take over the London Stock Exchange (LSE) rejected) has vowed to press on with the deal. The London Stock Exchange also said it would be sticking with its US$27 billion acquisition of data and analytics company Refinitiv.
LSE shares rose 3.3% on the news of the rejection. The LSE also owns the Milan stock exchange and has a large presence in the US through its FTSE Russell index subsidiary and LCH.
Meanwhile, 23% of surveyed companies with an office in Hong Kong are thinking of leaving the city to escape ongoing protests, with Singapore as their favoured destination. Around 1% have already made plans to relocate. Of those firms who are thinking of leaving, 90% see Singapore as the best option.
Around 80% of respondents said the protests have affected their future investment decisions regarding Hong Kong.
Developers in Singapore are concerned about the lackluster new home sales according to Chia Ngiang Hong, president of the Real Estate Developers Association Singapore (Redas).
Based on URA data, as of 30 June 2019, there were about 54,000 uncompleted private residential units in the pipeline with planning approvals and 35,500 of these units remain unsold. On top of that, the supply overhang is exacerbated by the potential 7,100 units from GLS sites and successful collective sales over the year that have not been granted planning approval.
All in, Chia estimates there will be 43,000 units available for sale in the near future. Based on the current take up of 8,000 a year, it will take four to five years for the market to absorb all the available units.
US stocks ended the week at near all-time highs. The Dow closed at 27,219.52, just 140 points shy of its all-time high recorded on July 15. The broader S&P 500 ended the week at 3,007.39, while the tech-heavy Nasdaq closed at 8,176.71. The US Federal Reserve has a policy meeting next week and is likely to cut interest rates once more, which could give the stock market another leg up.
Yield-hungry investors in Japan rushed to snap up SoftBank Group Corp bonds. Monex Group Inc’s online brokerage sold out 500 million yen (S$6.46 million) of the bonds in less than three minutes. Softbank is raising a total of 400 billion yen in the most recent bond sale and has priced the seven-year notes at a 1.38% interest rate.
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