News

China’s Communist Party leadership [CCP] was finally galvanized into action this week as the Chinese property and technology sectors soared in value with the HK index + 9.1%. The rise [the most since 2008] began on the 16th and 17th, as the leadership in Beijing acknowledged that risks needed to be reduced and confidence restored.

No less than vice-premier Liu He suggested a proposed property tax would be cancelled as The State Council Committee pledged to ensure market stability after months of plunging asset prices and unsettling talk of regulation in China and accounting issues on US-listed counters.

The Property index was +14.2%, and the Tech index climbed 22%. Even battered down Alibaba [BABA] jumped from $73 to $100, assisted by news that the company intends to accelerate its buyback initiative.

The Banking and Insurance regulator stated it would stabilize land and home prices and encourage mergers and acquisitions to assist developers in buying distressed assets.

Elsewhere the negative news and effects of people displacement in Europe and the sanctions imposed on Russia will affect global growth as the Ukrainian Russian conflict reverberates around the globe. Talk of an immediate ceasefire and resolution remain distant but not as remote as last week.

The prices of raw materials and food continue to see-saw at elevated levels, although oil has dropped back to around $105 from a fear-induced high of $140. Likewise, gold from over $2050 to $1937 as of writing.

However, if Ukraine is unable to plant [barley & wheat] this spring, the risks of food shortages even famine in some parts of the developing world cannot be ignored, with all that implies.

The conflict is also bound to exacerbate disruptions already affected by Covid supply chain backlogs that will inevitably stoke inflationary concerns.

The bottom line is that the longer this conflict persists, the greater the impact on global growth.

Rising prices, redirecting supply chains, protecting margins are just some of the challenges facing business managers across the globe.

The worst-case scenario of NATO becoming involved, triggering fevered speculation on nuclear weapons and a much broader embroilment and dislocation, would undoubtedly cause a global recession and stop investments in infrastructure, education, and green energy.

For now, markets are holding their breath, praying for resolution, and enjoying something of a relief rally in this fourth week of uncertainty and apprehension.