Week 46

14 November – 18 November

 

14 November

 

The European Central Bank’s vice-president has warned that Donald Trump’s US election victory could expose the eurozone to rising protectionism and political risk, suggesting the bank is ready to agree to a fresh round of controversial bond purchases to bolster economic recovery.

 

Indian prime minister Narendra Modi sought on Monday to rally public support for his draconian decision to scrap most of the country’s existing banknotes, while the government urged citizens struggling to obtain cash not to panic.

 

The New Zealand dollar is lower, and stocks are higher, following a 7.8 magnitude earthquake that struck the south island on Sunday, local time.

 

Prominent Dubai businessman Mohamed Alabbar is teaming up with a Saudi sovereign wealth fund to launch a $1bn ecommerce platform that he hopes will “dominate” ecommerce in the region.

 

15 November

 

Italian government bonds are leading Europe today, getting a healthy boost on the back of better-than-expected growth figures as the global government bond rout takes a break.

 

Portugal’s economy grew much faster than predicted in the third quarter, as higher exports helped the country to its strongest quarterly growth since 2013.

 

The Shenzhen-Hong Kong stock connect programme is set to launch within the next several weeks, offering foreign investors unprecedented access to the Shenzhen market. For readers unfamiliar with the Shenzhen exchange, here is a brief overview in charts.

 

China’s A-share equity markets are generally viewed as the final frontier of equity investing. In 1990-91 trading began in Shanghai and Shenzhen during the initial phase of economic reform. However, despite a combined market capitalisation that has risen to about $7.5tn — second only to the US — and with more than 2,900 companies listed, this is a universe that has been largely closed off to global investors

 

16 November

 

Donald’s Trump’s arrival in the White House will hit the low-earning and jobless Americans who voted the Republican into office, Janus Capital’s Bill Gross has said, revealing that he did not vote for either Republican or Democratic nominee in the US presidential election.

 

Global inflation expectations have soared to their highest level in 12 years according to a survey of fund managers, raising fears the world economy could be heading into a period of “stagflation”.

 

An earnings guidance upgrade and better than expected third-quarter sales gains from home improvement retailer Home Depot failed to impress investors on Tuesday. Shares in the Atlanta-based company fell 2.6 per cent to $124.40, taking its losses this week to 4.3 per cent amid concerns over the outlook for the US housing market.

 

The rise of advanced technology is likely to depress sales of smartphones in mature markets by 20 per cent within the next 10 years, as the loss of skilled jobs to artificial intelligence means consumers have less money to spend on the latest gadgets.

 

17 November

 

The European Central Bank’s landmark stimulus measures should be withdrawn “as soon as possible”, one of the bank’s senior officials has said.

 

The Philippine economy has surged to record the strongest growth in Southeast Asia, in an early boost for President Rodrigo Duterte’s efforts to court investors and calm business fears about the impact of his tilt from the US to China.

 

Hugo Boss has warned it will not return to growth until 2018, sending shares in the German fashion label sharply lower as investors counted the cost of an ill-conceived attempt to diversify beyond men’s suits.

 

Since last week’s US elections, emerging market assets have been spooked by the possibility of higher US interest rates and greater trade protectionism. That this should result in sudden and broad-based losses for holders of all types of EM investments — including equities, local debt, external bonds and currencies — should not come as a great surprise.

 

18 November

 

Egypt’s agreement with the IMF on a $12bn, three-year loan will help finance Egypt’s import needs while cushioning the effects of the reduction in fuel subsidies and the floating of the pound, prior actions that had been demanded by the Fund. Egypt has already received the first tranche of $2.75bn after having secured $6bn in additional financing.

 

Divergent paths for monetary policy in the world’s two largest central banks is making from some striking yield charts. The spread between US 10-year treasury yield and its German equivalent has now reached its highest level since 1989, in the days before German reunification, according to data compiled by Bloomberg.

 

Worries are growing that a build-up of unsold oil off the coast of the UK will keep prices down as the broader market surplus increases pressure on Opec to cut production.

 

Mortgage rates have jumped higher following the US presidential election, with expectations that it could lead to a slowdown in housing activity.