DUBAI STAYS AN INVESTMENT DESTINATION
Real estate transactions in Dubai in the first half of 2018 reached Dh111 billion, reaffirming emirate’s attractiveness and ability to compete with global investment destinations, according to the Dubai Land Department. The strengths portrayed by Dubai’s realty investments underscore the leadership’s move to ease business processes
sofia — As a trade war rages between China and the US, Chinese Premier Li Keqiang is meeting leaders from central and eastern Europe in Bulgaria on Saturday to discuss investment opportunities.
Road and rail projects funded by China will be high on the agenda at the summit, which has raised concerns in Brussels and richer Western European countries about growing Chinese influence in the region.
At the seventh annual gathering of the so-called “16+1 cooperation”, Li will meet leaders and firms from 11 EU member states and five Balkan nations hoping to join the bloc.
Their talks will focus on joint ventures in industry and the high-tech sector as well as infrastructure, agriculture and tourism, the Bulgarian hosts said in a statement.
But there are fears the summit could be an attempt by China to vie with EU projects and aid by funding infrastructure under its global Belt and Road initiative and thus divide the bloc.
“The meetings have prompted considerable speculation in Brussels and other European capitals that they are a Chinese effort to ‘divide and rule’ Europeans,” a December 2017 report by the European Council on Foreign Relations (ECFR) said.
Li hurried to downplay Brussels’ concerns on Friday.
“The 16+1 cooperation is by no means a geopolitical platform. Same may say that such cooperation may separate the EU but this is not true,” he said after talks with Bulgarian premier Boyko Borisov.
“China supports European integration and a united EU because we understand that the EU is an important force for global prosperity and peace.”
Borisov added that China was not seeking to compete with but rather complement EU aid in the region.
Enthusiasm among participants has waned through the years as the flood of Chinese cash — including a promised $10 billion credit line and $3 billion investment fund — has largely failed to materialise.
“Eastern Europeans are disappointed (by) the actual level of investments... and lack of interest for the loans,” ECFR researcher Francois Godement told journalists in Sofia via video link on Thursday.
The dropping of several big infrastructure and energy projects has led to scepticism in Poland and Romania while the enthusiasm of Hungary and Serbia, which have managed to attract some investment, is now “much more lowkey”, he added.
The Sofia summit comes the day after a tariff spat between China and the US escalated into a fullblown trade war as 25-per cent US duties came into force Friday on $34 billion of Chinese goods. Li slammed the tariffs, saying China will retaliate while committing itself to “further opening... our markets to ease market access to foreign companies” — something the EU has long pressed for.
US President Donald Trump’s offensive has led to a major shift in China’s attitude towards Europe and the Asian giant is now “sweettalking to the EU” on trade matters, Godement said.
Meanwhile Li stressed China’s “huge market and potential for growth” Friday, adding that “the international environment might change”.
However, small markets in central and eastern Europe seem an unlikely target for China’s efforts to compensate for lost revenues.
Adrian Nikolov from the Sofia Institute for Market Economics pointed to markets in Asia as a more likely target.
Li will travel next to Germany, which has been particularly reticent on the 16+1 format, to seek common ground with Chancellor Angela Merkel.
The EU is also locked in a trade row with Trump, who has threatened to impose similar 20-per cent import taxes on EU cars.
The bloc will hold its own summit with China in Beijing in mid July.
new york — With the United States and China finally formalising tit-for-tat import tariffs, Wall Street is gearing up to dissect US corporate earnings in the coming weeks for signs of a trade war impact and whether it will affect spending plans.
Investors worry the trade conflict with China, the United States’ largest trading partner, could make companies delay plans for capital expenditures, which jumped in the first quarter after the late December US tax overhaul that included massive tax cuts for corporations.
The United States and China slapped duties on $34 billion worth of each others’ imports on Friday, escalating their conflict and suggesting there was little sign the dispute will soon end.
Machinery, aerospace and other industrial names have been among the hardest hit. S&P 500 industrials have fallen more than five per cent since March 1, when US President Donald Trump said he would impose steep tariffs on steel and aluminum, while the S&P 500 has risen more than one per cent in that period.
Following the tax package approval, expectations were high that companies would ramp up not just buybacks and dividends but also capital spending in 2018, said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
“What we’re hearing from a number of CFOs is if the trade issue continues to dominate the headlines and create even more uncertainty, those plans may be on hold,” she said.
The impact isn’t going to be on earnings already made; it could though impact the accompanying guidance to the extent management offers any Mark Luschini, chief investment strategist at Janney Montgomery Scott
In the first quarter, year-overyear S&P 500 capital expenditure growth was the highest since 2011, according to S&P Dow Jones data.
Strategists at Data Trek Research in New York said in a recent note the “primary planning headache” for corporate managers in the second half of the year will come from uncertainty related to trade and tariffs.
“The major concern is the supply chain. So many little parts for almost everything are manufactured in China, and there can be a real hold-up in manufacturing because of these tariffs... It is all a balancing act,” said Tim Ghriskey, chief investment strategist at Inverness Counsel, in New York. “For every company hurt, there’s a company that’s being helped. So this isn’t negative for everyone by any means.”
Reporting on the second quarter kicks into gear this week, with results on Friday from JP Morgan Chase, Wells Fargo and Citigroup. More than 200 S&P 500 reports are due the following two weeks, including from some US companies that could be caught in the middle of a US trade war with China. They are expected to include results from Honeywell, Boeing, Whirlpool and Western Digital, while results from Caterpillar are due on July 30.
Profit forecasts that include a potential tariff impact will perhaps even overshadow second-quarter earnings growth, which analysts say could equal or surpass the first-quarter’s 26.6 per cent yearover-year increase. That was the biggest since the fourth quarter of 2010, according to Thomson Reuters data.
“That dominates the landscape at the moment. The impact isn’t going to be on earnings already made; it could though impact the accompanying guidance to the extent management offers any,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Though consumer discretionary shares have been among the best performers this year, UBS analysts said import tariffs could be a worry for the retail industry.
Harley Davidson drew attention in June when it warned of a financial toll from trade tensions, and the trade dispute in general has created uncertainty for investors struggling to value stocks at a time strong corporate profits might otherwise help carry the bull market through its 10th year. Some investors say much of the negative news has already been priced into the market, suggesting stocks could gain as earnings are reported.