Trade battle between the US and China intensified

Fears of a protracted trade battle between the US and China intensified. China’s president Xi Jinping said that in dealing with the US, China must prepare for a new Long March – seen as a heroic episode in Communist Party history – and encouraged the Chinese to remain resilient in the face of hardship. 

From an economic perspective, the inauguration of the 6th democratically elected president of South Africa over the past weekend was overshadowed by international events. 

Fears of a protracted trade battle between the US and China intensified. China’s president Xi Jinping said that in dealing with the US, China must prepare for a new Long March – seen as a heroic episode in Communist Party history – and encouraged the Chinese to remain resilient in the face of hardship. Xi also obliquely threatened to withhold Chinese exports to the US of rare earth elements. These are essential raw materials found in many high-technology products. US president Donald Trump and Chinese President Xi Jinping will meet at the G20 summit in Japan in late June. Trump pointed to the G20 meeting as a potential turning point in resolving the conflict, saying there is a good possibility of a deal with China.

British Prime Minister Theresa May announced that she would resign on 7 June, shortly after a state visit to the United Kingdom by President Donald Trump. May will stay on as prime minister until a new Conservative Party leader is chosen, a process that will likely extend into July.

Amid global trade conflict, slowing economic growth and an unresolved Brexit process, voters across the European Union head to the polls this weekend to vote for members of the European Parliament.

All these factors weighed heavily on markets and the global selloff continued. The JSE closed 3.09% lower for the week in line with global markets. The currency remained stable at around R14.40 against the USD and R18.33 against the pound. On a more positive note, the price of Brent crude oil dropped by 5.69% to $67.95 per barrel, on the fears of lower global growth. 

The Presidency advised on Sunday evening that President Cyril Ramaphosa would announce the cabinet later in the week and resolve the burning question of who South Africa’s new deputy president will be. Equity markets look attractive from a valuation perspective and it is hoped that a pro-business and growth executive would be the injection markets need.  


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SECURITAS – Wealth Management