Overseas Headlines- January 25, 2019

United States:

 State of Play: U.S.-China Trade Negotiations `Miles’ From Deal

We’re about five weeks away from a deadline for the U.S. to escalate tariffs on $200 billion of Chinese goods if no breakthrough deal on trade relations is reached. Following a round of negotiations in Beijing in early January, Chinese Vice Premier Liu He is set to travel to Washington for what the White House is describing as “very, very important” talks from Jan. 30-31. A Chinese delegation including vice ministers will arrive in Washington on Monday to prepare for the negotiations led by Liu that will include China’s central bank governor Yi Gang, according to people familiar with the matter. While both sides appear to be in close contact with each other as the next formal round approaches, it’s apparent that there’s still a long way to go before a deal can be concluded that will pass muster with President Donald Trump. Commerce Secretary Wilbur Ross said on Jan. 24 that the U.S. and China are “miles and miles” from a deal. Wide-ranging changes in the way China manages foreign trade and its own economy. Specifically, U.S. Trade Representative Robert Lighthizer has zeroed in on China’s alleged abuses of intellectual property and state sponsorship of companies. Trump has also railed against the size of the U.S. trade deficit with the China, and negotiators have made varying demands about how Beijing addresses this. The goal of “reciprocal trade” has been a clear priority of Trump’s protectionist policies.



 U.K. Firms Building Up Cash, Stock Reserves Ahead of Brexit

 Businesses are building up cash as Britain moves closer to leaving the European Union without a deal in place, according to data from UK Finance. Deposits held by non-financial companies at main high street banks grew by 3.5 percent in the year to December, with the biggest growth seen in the retail, transport, and power sectors. The report also showed that loans to manufacturers climbed 8.4 percent in a year that saw an overall contraction in borrowing by U.K. firms. “This may in part be driven by manufacturing businesses stockbuilding in the face of ongoing economic uncertainty,” said Stephen Pegge, managing director for commercial finance at UK Finance. “The yearend has also seen a renewed increase in business deposits, particularly within the construction and retail sectors, suggesting firms are preparing for uncertain trading conditions by building up their cash reserves.” The figures also underscored the weakness of the U.K. housing market, with the number of mortgages approved in December dipping to a three-month low of 38,779, below the average of the previous six months. Consumers meanwhile paid down credit-card debt, with repayments exceeding borrowing by 20 million pounds ($26 million), the most since April 2016. “This reflects the growing trend of consumers using credit cards as a preferred payment method rather than as a means of borrowing, in order to take advantage of additional protections and value-added benefits,” said Eric Leenders, managing director for personal Finance at UK Finance.



China Sends Vice Ministers to Washington to Pave Way for U.S. Talks

A Chinese delegation including deputy ministers will arrive in Washington on Monday to prepare for high-level trade talks led by Vice Premier Liu He, according to people briefed on the matter. Vice Commerce Minister Wang Shouwen and Vice Finance Minister Liao Min will arrive in the U.S. on Jan 28, according to two of the people, who asked not to be named as the discussions aren’t public. China’s central bank governor Yi Gang will join the talks, one of the people said. It wasn’t immediately clear which other officials will attend. The U.S. has billed the Liu talks as “very, very important” while playing down the chances of a breakthrough. Liu will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin from Jan. 30 to 31, with about five weeks remaining until a deadline for the U.S. to escalate tariffs on $200 billion of Chinese goods. The two sides do not appear close to agreement on a wide range of disputes, from China’s handling of intellectual property to the imbalance in goods flows between the two nations. China’s commerce, finance and foreign affairs ministries, as well as the central bank, didn’t immediately respond to faxed requests for comment on the trip. PBOC Governor Yi accompanied Liu for earlier trade talks in Washington in May, and was among Chinese officials who participated in negotiations with the U.S. in Beijing in June. The central bank oversees management of the yuan’s exchange rate, which U.S. Treasury Secretary Steven Mnuchin said Thursday is an important aspect of the trade talks.


Disclaimer: Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.