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Keep faith in China, Li Qiang tells businesspeople at ‘Summer Davos’
As China hosted foreign and local delegates at the World Economic Forum’s “Summer Davos” in Dalian this week, Beijing’s No. 2 official struck a defiant tone.
First in a speech and then in private with a smaller group of executives, Li Qiang insisted that the recovery of the world’s second largest economy was on track, despite investors’ doubts.
Even the country’s property market crisis, characterized by falling prices and a glut of millions of unsold apartments, was improving, Li said at the closed-door event with foreign and local business leaders.
The prime minister said participants “should be confident about China’s economy,” said one person who attended the private meeting.
In the past, such sentiment would have been easily sold on the World Economic ForumChina Conference. Held in a giant purpose-built conference center with a lobby the size of four football fields, the “Annual Meeting of the New Champions” was once a magnet for the global business elite. A US executive recalled corporate jets fighting for space at the city’s airport in pre-pandemic years.
This year’s summit attracted 1,600 participants, a slightly higher number crowd bigger than in 2023 as China was emerging from control of the pandemic. But Western executives accounted for only about a fifth of those present, and top global executives were few and far between. The most prominent foreign politicians were Poland’s President Andrzej Duda and Vietnam’s Prime Minister Pham Minh Chinh.
“There were more foreigners than last year, but not as many Westerners,” said Zhu Ning, head of China at Brunswick Group. “People are cautiously optimistic about the outlook for this year, but uncertain about the long term,” he said of China’s Economy and business environment.
The World Economic Forum’s annual ‘Summer Davos’ event in China was a magnet for the global business elite before the pandemic © Pedro Pardo/AFP/Getty Images
The agenda included topics such as artificial intelligence and climate change, but parallel discussions focused more on the economy and the EU’s recent decision to increase tariffs in Chinese electric vehicles by up to almost 50%.
Li rebutted complaints that Chinese production of new energy goods was distorting trade, saying exports of electric vehicles and lithium batteries “enriched supply in the international market”.
Behind closed doors, he made efforts to win over skeptical foreign companies, saying he was there to listen to companies’ complaints and introduce China’s commerce minister to investors.
Foreign companies made presentations to the prime minister at the private meeting, including Coca-Cola, Exxon and Swiss human resources company Adecco Group, according to one participant.
Li’s presence for most of the day in Dalian represented a sharp contrast to the China Development Forum in March – the country’s biggest event for foreign executives – which the prime minister left after delivering his speech, contradicting the tradition of private meetings with business leaders.
Separately this week in Beijing, a government-backed “Invest in China” event praised successful foreign investments, including from Airbus, BMW, Intel and Novo Nordisk, the Danish pharmaceutical company whose weight-loss drug Wegovy was approved for sale in China this week. “Investing in China is investing in the future,” stated a CCTV report, which highlighted government support for projects.
German Vice Chancellor Robert Habeck has signalled a willingness to open discussions with China on tariffs for electric vehicles in Europe © Sebastian Christoph Gollnow/dpa
There were signs that the charm offensive resonated with some in Europe.
On a recent visit, German Vice Chancellor Robert Habeck, whose country is a major investor in China’s automotive industry and has criticized the EU’s decision to impose tariffs, said the door was “open for discussions” about taxes.
On Wednesday, he appeared to go further, saying the European Commission must be prepared to resolve the tariff dispute “politically.”
An executive at a European carmaker in Dalian, who declined to be named, said one solution could be a sliding scale of tariffs that could be gradually reduced as a Chinese company locates production in Europe.
This would give European companies time to prepare for Chinese competition and encourage Chinese investors to create jobs on the continent – just as Beijing demanded of foreign car manufacturers when they entered its market decades ago.
“We will achieve a win-win situation,” said the executive.
Another big topic of side discussion was the US presidential election and what the outcome would mean for US-China relations.
“American and European political cycles and pandemic hangover anxieties have combined to produce protectionist and isolationist sentiments,” said David Adelman, managing director at Krane Funds Advisors in New York and a former U.S. ambassador to Singapore.
He said the U.S. election would involve “a heavy dose of anti-China rhetoric” but that “the smart people around both candidates understand that the U.S. and Chinese economies are interdependent and that, in the long term, the Americans benefit from globalization.”
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Concerns about China’s compliance with U.S. sanctions related to the war in Ukraine were also fueling reluctance among U.S. investors.
“There is a lot of capital sitting idle looking to invest in China,” Kungsheng Fan, head of China at Lazard Asset Management, said during a panel discussion.
Most investors privately predicted that China’s economic growth would continue to be “two-track”, with exports offset by uneven domestic demand. They will also be closely watching the third plenum in July, a meeting every five years where China’s leadership sets medium-term economic policy.
Li’s speech in Dalian “had the right sentiments about dealing with the symptoms as well as the root causes of China’s economic malaise,” said Eswar Prasad, professor of trade policy at Cornell University, but had “little to offer in terms of specific solutions.”
The prime minister “did not directly address the concerns of investors and analysts about the growing problems in the real estate market and other sectors of the economy or the apparent change in the government’s attitude towards private enterprise,” Prasad added.
Additional reporting by Wenjie Ding and Nian Liu in Beijing
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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