|
Last week's Hedge Clippings noted that President Trump was keen to show his Chinese counterpart that he had the upper hand in the ongoing tariff war by slapping a 10% tariff on a further $300 bn of Chinese imports to the US effective September 1, with the threat of increasing in stages to 25%. Whilst China certainly has more to lose than America in the tariff war, it didn't take long for President Xi to respond, not in kind, but by using his currency weapon.
This graphic courtesy of the BBC indicates the battle so far - and we'd expect there's a way to go yet:
The picture doesn't include the latest $300 bn, but it certainly shows Trump has a larger arsenal. Or something sounding like it.
Equity markets reacted dramatically with a savage sell-off, only to rebound equally rapidly over the course of the week, which probably only goes to show how skittish markets are. However, it also indicates the potential for Trump's tariffs skirmish to escalate into something much more dangerous, including to Australia, is significant.
Closer to home AMP was front and centre in the news with their annual results, accompanied by a capital raising easily digested by institutional investors, and apparently oversubscribed three times. Whilst Hedge Clippings is not a stock analyst, we would still consider that there is a long way to go before AMP recovers to its former glory days, if ever. Whilst some investors (as above) are obviously showing faith in the new management going forward, others are shunning, or redeeming funds from AMP products, whilst disgruntled AMP advisers are considering, or have already instigated, legal action.
AMP's woes are symptomatic of the changes and disruption taking place within the financial services sector, further exaggerated by technology, regulation, and the ongoing drive to reduce fees wherever possible. The vertically integrated product manufacture/distribution model so eagerly adopted by David Murray (ironically) and destroyed last year by the Hayne Royal Commission, will result in losers, but also in opportunities for those prepared and able to take them.
|
