Business Maverick

Thursday, June 18: Five Things You Need to Know to Start Your Day

By Bloomberg 18 July 2019
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Illustration: Leila Dougan | Company logos: Facebook, Amazon, Apple, Netflix, Google

Asian stocks are poised for a downer amid mixed U.S. corporate earnings and lingering trade tension. A China investor who’s beaten almost all of his peers is betting big on Kong Kong. And Iran says it could shut the Strait of Hormuz if it wants to. Here are some of the things people in markets are talking about today.

Gold Shines as Stocks Sink

Asian equity futures are pointing to a rough opening after U.S. stocks declined on mixed corporate earnings and lingering trade tension. Treasuries rose, with 10-year yields down more than four basis points. The dollar dropped against most of its G-10 counterparts, with the kiwi and loonie leading the way. Gold jumped more than 1%, helped by comments from Dalio, who said adding the metal to one’s portfolio “would be both risk-reducing and return-enhancing.”

Betting Big on Hong Kong

After beating 98% of his rivals in China with 46% return in one equity fund, investor Qu Yang is shifting his money into Hong Kong. The money manager at Qianhai Kaiyuan Fund Management Co. has boosted the proportion of Hong Kong shares in one of his winning funds to more than 30% over the past three months, according to the fund’s latest fact sheet. “Hong Kong stocks have a better chance than A shares of outperforming in the second half,” Qu said. He argues a likely rate cut by the U.S. Federal Reserve should draw more foreign investors to equities in the city, where valuations remain below historical averages.

Central Banks in Focus

Two Asian central bank decisions will provide the day’s suspense. Analysts are divided on whether the Bank of Korea and Bank Indonesia will cut their benchmark rates by 25 basis points at meetings Thursday. Bloomberg Economics is in the hold camp for both, expecting policy makers in Seoul to wait to ease until after any Fed action, and those in Jakarta to be constrained by concerns about capital outflows.

Iran’s Hormuz Threat

The U.S. “shot itself in the foot” by abandoning the Iran nuclear accord, Foreign Minister Mohammad Javad Zarif told Bloomberg, offering little hope for restarting talks under President Trump. He criticized European countries for not carrying out their obligations under the deal, and reiterated that Tehran won’t pursue atomic weapons. He also said Iran could shut the Strait of Hormuz but doesn’t want to.

Netflix Stumbles

Netflix served up a twist, losing customers in the U.S. and signing up only 2.7 million globally in the second quarter, well shy of the 5 million it had forecast. Blame a recent price increase and a weak slate of original programming. Things should pick up in the second half with a heavy release schedule, and the company expects 7 million new users this quarter. Still, shares fell more than 11% in late trading.

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In other news...

South Africa is in a very real battle. A political fight where terms such as truth and democracy can seem more of a suggestion as opposed to a necessity.

On one side of the battle are those openly willing to undermine the sovereignty of a democratic society, completely disregarding the weight and power of the oaths declared when they took office. If their mission was to decrease society’s trust in government - mission accomplished.

And on the other side are those who believe in the ethos of a country whose constitution was once declared the most progressive in the world. The hope that truth, justice and accountability in politics, business and society is not simply fairy tale dust sprinkled in great electoral speeches; but rather a cause that needs to be intentionally acted upon every day.

However, it would be an offensive oversight not to acknowledge that right there on the front lines, alongside whistleblowers and civil society, stand the journalists. Armed with only their determination to inform society and defend the truth, caught in the crossfire of shots fired from both sides.

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