Business Maverick

Friday, 10 October: Five Things You Need to Know to Start Your Day

By Bloomberg 11 October 2019
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(Photo: AdobeStock)

A partial U.S.-China trade deal may be in sight, the pound surges on a positive Brexit turn, and the markets take in the good news. Here are some of the things people in markets are talking about today.

Deal in Sight?

A mini-deal may be on the cards in the latest development of the highly scrutinized U.S.-China trade talks. President Donald Trump said the first day of high-level trade negotiations between the U.S. and China went “very well” and will continue ahead through Friday when he’ll meet the top Chinese negotiator. S&P 500 futures extended gains after the news. The news must come as a relief for traders. One estimate predicts the S&P 500’s decline in the event of another breakdown would be more than double its potential gain if the two sides reach some kind of truce. Still, Trump has said he would prefer a complete agreement, rather than the partial deal that appears to be on the table. Meanwhile, China was been hit by steel tariffs as high as 66.4% from the European Union.

Market Optimism

Asian stocks looked set to gain as U.S.-China trade talks progressed into a second day. Treasury yields jumped, U.S. equities climbed and futures rose in Tokyo, Sydney and Hong Kong. Ten-year Treasury yields rose to 1.67%, while the yuan climbed and the dollar declined. Elsewhere, the pound touched the highest level in two weeks against the greenback after U.K. and Irish leaders said that there may be a possible “pathway” to a Brexit deal. Crude rose after OPEC Secretary-General Mohammad Barkindo said members and allies including Russia will do “whatever it takes” to prevent another oil slump as the global economy weakens. Gold fell 0.8% to $1,493.28 an ounce.

Brexit ‘Pathway’

There may a way forward on Brexit after all.  The pound jumped the most in seven months after a positive meeting between U.K. Prime Minister Boris Johnson and Irish premier Leo Varadkar, who identified a “pathway” to a potential deal. Varadkar said he believes a deal is possible before the end of the month, and urged negotiators to resume talks in Brussels. Just a few days ago, Varadkar said it’s hard to see the impasse over Brexit breaking before next week, while Johnson had commented that a deal was “essentially impossible.”

Singapore Suites

The luxury end of Singapore’s residential market is hot, and it’s all thanks to China, according to Colliers International Group Inc. In the first nine months of the year, 315 apartments in Singapore’s prime core central region were bought by foreigners, almost recovering to the pace before the government introduced cooling measures in July 2018. Of those, 97 units, or about one-third, were purchased by mainland Chinese nationals, which make up the largest foreigner buyer group in Singapore. Meanwhile, only eight units were bought by Hong Kongers. “The increase in luxury home sales could be due to more China buyers seeking an alternative from Hong Kong,” said Tricia Song, the head of research for Singapore at Colliers.

Asian Advantage

You’re better off starting up your hedge fund in Asia than the U.S. According to Goldman Sachs, new Asian hedge fund firms have a higher rate of survival, with research showing that 64% of the 129 hedge fund startups they worked with in Asia over 10 years were still alive. That compares with 52% for the 468 launches Goldman took on in the U.S. More than two-thirds of Goldman’s startup clients in Asia began with $50 million or less. Hedge funds in the region often start smaller and take longer to expand their AUM because of a fledgling homegrown investor base and the geographical distance from the big pools of pension and endowment money. But the survey also noted that the smaller the fund at inception, the higher its chance of crashing and burning.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

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