09-27-2019, 09:16 PM
(This post was last modified: 09-28-2019, 08:28 AM by John J. Xenakis.)
** 27-Sep-2019 World View: Trump considers blocking all US investments in China
The Trump administration is discussing a major escalation in the
US-China trade war, whose purpose is to curtail or end US investments
in China. China's economy is already suffering because of the
existing trade sanctions, and preventing US investments would cause
severe new disruptions.
Among the options being considered are these:
It's not clear whether there's a legal way for the administration to
require the delisting of Chinese companies from US stock exchanges,
but if successful it would put harsh new limits on Chinese access to
American dollars.
For example, the MSCI World Index is a broad global equity index that
represents large and mid-cap equity performance across 23 developed
markets countries. According to msci.com, it covers approximately 85%
of the free float-adjusted market capitalization in each country and
MSCI world index does not offer exposure to emerging markets.
Hundreds of Chinese businesses have been added into the MSCI Inc.’s
indexes since last year, in order to increase the volume of American
investments in China. Florida Republican Senator Marco Rubio and
others in Congress have become alarmed by this, and have been
advocating for stronger investment restraints and greater scrutiny for
Chinese companies in stock indexes and U.S. pension funds.
Trump's nominal strategy is to force China to stop intellectual
property theft and forced technology transfers. But as I've written
in the past, the larger picture is that Trump's strategy is to disrupt
critical places in China's economy in order to stop or slow its
headlong rush to launch a war with Japan, Taiwan and the United
States.
*** 23-Sep-2019 World View: Trump's strategy with China
http://gdxforum.com/forum/viewtopic.php?...804#p47804
Escalating the trade sanctions will certainly succeed in disrupting
China's economy further. The intent is to stop or slow its headlong
rush to launch a war with Japan, Taiwan and the United States, but
when sanctions were imposed on Japan in 1941, Japan responded by
bombing Pearl Harbor.
---- Sources:
-- Trump considers delisting Chinese firms from U.S. markets: sources
https://www.reuters.com/article/us-usa-t...SKBN1WC1VP
(Reuters, 27-Sep-2019)
-- White House deliberates block on all US investments in China
https://www.cnbc.com/2019/09/27/white-ho...china.html
(CNBC, 27-Sep-2019)
-- China trade talks are set to resume on Oct. 10
https://www.cnbc.com/2019/09/26/china-tr...ct-10.html
(CNBC, 26-Sep-2019)
-- U.S. Stocks Hit 3-Week Low as Trade Tensions Rise: Markets Wrap
https://www.bloomberg.com/news/articles/...rkets-wrap
(Bloomberg, 27-Sep-2019)
-- White House Weighs Limits on U.S. Portfolio Flows Into China
https://www.bloomberg.com/news/articles/...a-k12ahk4g
(Bloomberg, 27-Sep-2019)
The Trump administration is discussing a major escalation in the
US-China trade war, whose purpose is to curtail or end US investments
in China. China's economy is already suffering because of the
existing trade sanctions, and preventing US investments would cause
severe new disruptions.
Among the options being considered are these:
- Delisting Chinese companies from U.S. stock exchanges
- Limiting Americans’ exposure to the Chinese market through
government pension funds
It's not clear whether there's a legal way for the administration to
require the delisting of Chinese companies from US stock exchanges,
but if successful it would put harsh new limits on Chinese access to
American dollars.
For example, the MSCI World Index is a broad global equity index that
represents large and mid-cap equity performance across 23 developed
markets countries. According to msci.com, it covers approximately 85%
of the free float-adjusted market capitalization in each country and
MSCI world index does not offer exposure to emerging markets.
Hundreds of Chinese businesses have been added into the MSCI Inc.’s
indexes since last year, in order to increase the volume of American
investments in China. Florida Republican Senator Marco Rubio and
others in Congress have become alarmed by this, and have been
advocating for stronger investment restraints and greater scrutiny for
Chinese companies in stock indexes and U.S. pension funds.
Trump's nominal strategy is to force China to stop intellectual
property theft and forced technology transfers. But as I've written
in the past, the larger picture is that Trump's strategy is to disrupt
critical places in China's economy in order to stop or slow its
headlong rush to launch a war with Japan, Taiwan and the United
States.
*** 23-Sep-2019 World View: Trump's strategy with China
http://gdxforum.com/forum/viewtopic.php?...804#p47804
Escalating the trade sanctions will certainly succeed in disrupting
China's economy further. The intent is to stop or slow its headlong
rush to launch a war with Japan, Taiwan and the United States, but
when sanctions were imposed on Japan in 1941, Japan responded by
bombing Pearl Harbor.
---- Sources:
-- Trump considers delisting Chinese firms from U.S. markets: sources
https://www.reuters.com/article/us-usa-t...SKBN1WC1VP
(Reuters, 27-Sep-2019)
-- White House deliberates block on all US investments in China
https://www.cnbc.com/2019/09/27/white-ho...china.html
(CNBC, 27-Sep-2019)
-- China trade talks are set to resume on Oct. 10
https://www.cnbc.com/2019/09/26/china-tr...ct-10.html
(CNBC, 26-Sep-2019)
-- U.S. Stocks Hit 3-Week Low as Trade Tensions Rise: Markets Wrap
https://www.bloomberg.com/news/articles/...rkets-wrap
(Bloomberg, 27-Sep-2019)
-- White House Weighs Limits on U.S. Portfolio Flows Into China
https://www.bloomberg.com/news/articles/...a-k12ahk4g
(Bloomberg, 27-Sep-2019)
