Overseas Headlines- March 14, 2019

United States:

China and U.S. to Push Back Trump-Xi Meeting to at Least April

A meeting between President Donald Trump and President Xi Jinping to sign an agreement to end their trade war won’t occur this month and is more likely to happen in April at the earliest, three people familiar with the matter said. Despite claims of progress in talks by both sides, a hoped-for summit at Trump’s Mar-a-Lago resort will now take place at the end of April if it happens at all, according to one of the people. China is pressing for a formal state visit rather than a lower-key appearance just to sign a trade deal, the person said. Xi’s staff have scrapped planning for a potential flight to the U.S. following a trip to Europe later this month, a separate person said. The people asked not to be named as the details are private. U.S. stock index futures dropped on the news. China’s offshore yuan extended its drop to as much as 0.51 percent, the most since Feb. 1. U.S. Trade Representative Robert Lighthizer this week pointed to “major issues” still unresolved in the talks, with few signs of a breakthrough on the most difficult subjects including treatment of intellectual property. Chinese officials have also prickled at the appearance of the deal being one-sided, and are wary of the risk of Trump walking away even if Xi were to travel to the U.S. White House communications staff didn’t immediately respond to an early morning request for comment. The State Council in Beijing also didn’t immediately respond to a request for comment. Trump himself has shifted tone in recent days, walking back from a more urgent approach to getting a deal signed as early as March. He acknowledged concerns in Beijing about the possibility of him walking away from a trade deal, offering to push back a summit with Xi until a final deal is reached.



Brexit Delay Adds Another Dimension of Damage to U.K. Economy

A delay to Brexit this week may be better than the alternatives, but that’s cold comfort for the U.K. economy. Parliament voted Wednesday to rule out leaving the European Union without a deal, seen by most economists as the worst case. While another vote Thursday is likely to buy time for an orderly divorce, that would hurt, too, by prolonging the uncertainty for businesses and consumers. Investment decisions are already being put off, and more deferrals are likely. On Thursday, RICS said its housing index has fallen to the lowest since 2011. A lack of clarity around Brexit was cited as the “critical factor” for the market. “We welcome MPs commitment to taking no deal off the table, however, it remains the default option if nothing else can be agreed,” said Helen Dickinson, head of the British Retail Consortium. “Businesses face mounting costs with every passing day as they try to mitigate the disruptive effects of leaving without a deal.” Bank of England policy makers have already lowered their forecast for business investment to a 2.75 percent decline for 2019 — from the 2 percent gain predicted previously — and that assumes a smooth exit this month. Jonathan Haskel, who joined the bank’s Monetary Policy Committee six months ago, warned this week that any delay would maintain the current level of uncertainty, further crimping spending. That’s not just the view from the top. “If there’s a delay, then that could be the worst thing that happens,” Alex McNeil, a commercial and residential valuer at Bramleys, a real-estate agency in Huddersfield, northern England, said last week. “We’d just end up in a further period of hiatus.”



China’s Slowdown Hits Employment Even as Recovery Signs Emerge

China’s economic slowdown deepened in the first two months of the year, pushing unemployment sharply higher and intensifying pressure on the government’s calibrated stimulus strategy. With industrial output having its worst start to a year since 2009 and retail sales expanding at the slowest pace since 2012, the unemployment rate jumped to 5.3 percent in February from 4.9 percent in December, the highest level in two years. On the upside, fixed-asset investment accelerated and property investment jumped. Against the backdrop of slowing global demand and domestic weakness, the jump in joblessness comes just days after Premier Li Keqiang announced an “employment first” strategy as a key part of economic policy for the coming year. That will feed into policy makers’ calculations as to if and when further stimulus measures to shore up the world’s second-largest economy are needed. “The increase of the unemployment rate shows rising pressure from the U.S.-China trade war on China’s job stability,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. “On a positive note, demand looks still resilient for now. The re-acceleration of fixed-asset investment shows that China’s proactive fiscal policy is taking effect. There is a good chance that fixed-asset investment growth may have bottomed out.” Asian stocks traded mixed on Thursday. Shares fluctuated in Hong Kong and Japan, and declined in China, with the Shanghai Composite gauge falling 1.2 percent.



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.