In addition to relaxing regulation for foreign banks, China will also support the efforts of local administrations to attract more foreign investment and give foreign investors more scope to borrow abroad. Stabilizing foreign investment is part of Beijing's policy to boost the slowing economy, which is visibly suffering from the trade conflict with the US. As more and more Chinese banks are currently struggling, liquidity and more financial stability is desperately needed.
Meanwhile, China's economy is likely to continue to lose momentum. The GDP growth figures for the third quarter, which will be announced on Friday, should continue to fall relentlessly from +6.2% to +6.1% year-on-year, according to expectations. This would indeed be the slowest expansion since the beginning of available recordings, even lower than during the economic slump in 2008/2009. At the same time, labor market data point to a stable situation, although others indicators already show a picture of rising unemployment, such as representative street surveys.
In the jungle of China's rather obscure economic indicators, there are also other, under-the-radar indicators, such as the percentage of unused commercial space. At 21.5% in the third quarter 2019, the office vacancy rate in China's 17 largest cities is as high as it was during the financial crisis. As a reference, in Lujiazui, on the banks of Shanghai's Pudong Rive, a highly sought-after location, vacancy rates climbed from 3% to 16% within three years. The Chinese office market is being shaken by a combination of forces: overseas companies are waiting for an end to hostilities in the Sino-US trade war before committing to new leases; skyscrapers built during the boom years have created oversupply; and cost-conscious tenants are moving to cheaper properties as the economy picks up.
US retailers suffered an unexpected decline in sales in September. Their revenues fell by -0.3 % compared to the previous month and thus for the first time since February, according to the Washington-based Department of Commerce. Economists surveyed by Reuters had predicted a plus of +0.3% after growth of +0.6% in August. Consumers bought lesser vehicles and building materials and made less online purchases last month. Consumption makes up circa two thirds of US economic output. However, the current low unemployment rate supports the still good American buying mood.
Six of the region's leading banks are expected to report stagnating total revenues in the third quarter, according to Bloomberg analysts' estimates. The collapse in earnings of European banks is likely to deepen as the economy weakens and negative interest rates play an increasingly important role in the lending business. The export-oriented European economy is suffering from international trade disputes. These are reducing demand for banking services and making it more difficult for some companies to repay their debt. Negative interest rates – the European Central Bank's panacea – could help shaken companies, but further hit banks as profitability suffers.
|14:30||USA||Initial jobless claims (week of the 10/12/19)||210,000|
|15:15||USA||Industrial production (m/m)||0.7%|
|USA||Philip Morris International||Q3|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: David Wolf, +41 44 250 83 48, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.