People’s Bank of China Head, Yi Gang stated this weekend at an online banking seminar to the G30 what many in the markets already suspected: despite Covid starting in China and almost a year ago having shut down large parts of China’s economy, not only is China back and enjoying an expansion in its economy, Yi Gang expects the economy to grow by 2% in 2020. Fortunately that in turn will benefit the other global economies which many will feel is small recompense for the spread of the virus globally.
Unsurprisingly Chinese Renminbi is enjoying its best level against the USD this year and is currently at 6.70 with the direction of travel clearly towards a still stronger CNY in 2021.
SGM-FX having taken these particular tea leaves on board has in the past months added both Mandarin and Cantonese language capabilities to the languages already on offer to our customers around the world.
Meanwhile in Europe, hard hit Italy is expecting a contraction of 9% in its economy in 2020. Next year the ruling coalition of the Five Star Alliance and the Centre Left PD party is expecting growth of 6%. Late on Saturday night the Italian government approved a package of measures that will see EUR 40 Billion of economic stimulus in 2021. Apart from the ever increasing amount of Italian government borrowing, markets are still pondering the productivity issue that Italy faces- not enough.
As expected Jacinda Ardern won a landslide victory in NZ this weekend and returns to office with a clear mandate to govern for the next 3 years. Less clearcut is how, having won on the ticket of Going Early and Going Hard against Covid, she will rescue the NZ economy. NZD 62 Billion or USD 41 Billion has been assigned to bolster the economy and keep people in work through a package of loans and other measures. Government borrowing will break the hitherto sacrosanct level of 20% of GDP where it stood at the end of 2019 and is forecast to rise to 55% of GDP by 2024. Tourism is a core component of the NZ economy and the success of the shutting of the NZ borders to foreigners in fighting Covid, has of course crushed the tourist industry. NZ will need more than her mantra of compassionate leadership as will the NZD. USD bought NZD 1.7771 on 24-03-20 and although it is now back to 1.51, the ongoing impact on the NZ economy of fighting Covid(albeit successfully) must give rise to expectations of a lower exchange rate.
It was 50 years ago this week that the film, Ned Kelly about the famous outlaw was released starring Mick Jagger. It bombed and was panned by the critics with (now Sir) Mick being told that he should stick to strutting on stage and singing Street Fighting Man rather than trying to play the role of a tough Australian bushranger. One of the kinder reviews described Mick Jagger as being……”as lethal as last week’s lettuce.”
Discussion and Analysis by Humphrey Percy, Chairman and Founder
UK Borrowing Another one for the pub quiz in case it comes up: UK government borrowing stands at £2.8 trillion or £2800 billion. While you digest that number over the chicken in the basket if indeed you are already in the pub, it will have increased by the time you get to the end of this […]
USD 2 Trillion Trade Deals That is the total trade deal bag that POTUS Trump is credited admittedly by himself with snagging in his whirlwind Gulf trip this week. Many are puzzled and a few have attempted to tot up the value of the Saudi, UAE and Qatari deals, but no-one has succeeded in getting […]
POTUS in Kingdom of Saudi Arabia As one of POTUS’ travelling companions on this week’s visit, Larry Fink of Blackrock represents everything that a US President might want to burnish his credentials in the desert kingdom: head of the largest asset manager on the planet, hugely influential and totally credible. Just a shame that he […]