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Business Maverick

December 6: Five things to know to start the day

An aerial view of the port and logistics hub in Lianyungang, Jiangsu Province, China, 20 May 2019, issued 29 June 2019. (PHOTO: EPA-EFE/ALEKSANDAR PLAVEVSKI)

Tariff talks drag on, Saudi Aramco raised $25.6 billion in the world’s biggest IPO and Hong Kong protesters are gearing up for another march. Here are some of the things people in markets are talking about today.

Close Relations

Chinese officials are in “close contact” with U.S. counterparts on trade negotiations, Ministry of Commerce spokesman Gao Feng said, while reiterating that tariffs should be reduced proportionately as part of a phase-one accord. Gao declined to give further details on the talks at a regular briefing in Beijing on Thursday. The world’s two largest economies are trying to reach a truce in a 20-month-long trade war that’s led to the largest volley of tariffs since the 1930s — hitting some $500 billion in shipments going in both directions. The U.S. has pledged to slap tariffs on more Chinese imports if a deal isn’t struck by Dec. 15, and many economists are pinning forecasts for a global economic rebound next year on a cease-fire that avoids such an escalation. Meanwhile, if you’re confused about the hot and cold rhetoric surrounding talk progess, here’s help decoding Trump’s trade brain, bluffs and bluster.

Markets

Asian stocks looked set for a muted open as traders awaited news on the U.S. job market and a looming scheduled American tariff hike on Chinese goods. Bonds and the dollar fell. Futures were little changed in Japan, Australia and Hong Kong. U.S. shares closed slightly higher Thursday. Treasury yields climbed after data showed jobless claims slumped to a seven-month low, signaling resilience in the labor market ahead of Friday’s employment report. Oil slipped after a volatile session as OPEC failed to impress traders with what appeared to be a cosmetic revision to output quotas.

World’s Biggest IPO

Saudi Aramco raised $25.6 billion from the world’s biggest initial public offering, closing a deal that became synonymous with the kingdom’s controversial crown prince and his plans to reshape the nation. The state-owned oil giant set the final price of its shares at 32 riyals ($8.53), valuing the world’s most profitable company at $1.7 trillion. It received total bids of $119 billion. For Crown Prince Mohammed Bin Salman, pulling off the sale could help get his ambitious plan to overhaul the economy back on track. It’s been derailed by problems at home, including the backlash against his purge of the elite, and abroad by the outrage over the murder of Washington Post columnist Jamal Khashoggi and the war in Yemen. But the deal ended up being very different from what the prince had envisaged when he first floated the idea in 2016 with an ambition to raise as much as $100 billion. Aramco offered just 1.5% of its shares and opted for a local listing after global investors balked at its hopes of valuing the company at $2 trillion. Instead, Aramco relied heavily on local investors and funds from neighboring Gulf Arab monarchies.

Strategy Rethink

As Hong Kong’s protesters gear up for another mass march downtown this weekend and possibly a strike next Monday, some of those who have fought on the front lines are reassessing their strategy. The Civil Human Rights Front (CHRF), which has organized some of the biggest rallies since unrest began in June, said Thursday night it received police approval for a rally — the first time it has gotten a permit in more than four months. The Sunday march will start at 3 p.m. in Victoria Park in Causeway Bay and head to the city’s business district in Central, the group said. An outburst of violence last month culminated in a nearly two-week siege around Hong Kong Polytechnic University, which is still littered with debris. Police arrested more than 1,300 people at the Kowloon site — almost a quarter of all those taken into custody so far — and seized about 4,000 petrol bombs along with explosives and corrosive liquids.

Sensex Surges

India’s economy is sputtering, but its $2.1 trillion stock market is powering ahead. Foreign investors are piling into country’s shares, betting the worst may have already passed. Economic growth is at the lowest since before Prime Minister Narendra Modi came to power in 2014. The economy expanded 4.5% in July-September, slowing for a sixth straight quarter as deteriorating local consumption, troubled banks and a weak global outlook all took their toll. But the equity market? Now, that’s a different story. The S&P BSE Sensex Index surged 13% from a low on Sept. 19 as it rose to all-time highs. Foreigners purchased a net $5 billion, give or take, of the country’s shares so far this quarter, while domestic investors have remained buyers of equity funds. What’s the deal? The bull case is that nothing here is out of whack. Stocks are simply acting as a leading indicator for the economy.

What We’ve Been Reading

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

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