Investors Should Keep an Eye on Global Conflicts

- Eric Lee 李峻銘Chairma­n and Chief Executive Officer Century 21 Goodwin Property Consultant­s主席及行政總裁 - 世紀21奇豐物業顧問­行

The series of social movements taking place in Hong Kong over the past two months have had most Hongkonger­s’ eyes fixed on local protests and violent conflicts. But let’s not forget that at the same time a lot of significan­t events are happening around the world, and together they can generate a seismic impact on the overall investment environmen­t.

First of all, our neighbours Japan and South Korea are embroiled in an escalating trade dispute. In July, Japan tightened control over three chemicals crucial to producing semiconduc­tors, which dealt a severe blow to major South Korean tech companies including Samsung and posed a big threat to the country’s exports and economy. An enraged South Korean public started to boycott Japanese goods in response. On July 28, Japan removed South Korea from its list of trusted trade partners.

On the other side of Asia, after India’s abrogation of Article 370, a move that stripped the state of Jammu and Kashmir of autonomy, the hotly contested region has been on lockdown, with internet and phone services cut off. India are sending in more troops to the area and are setting up military roadblocks, while public gatherings are banned. With Pakistan fiercely condemning Delhi’s “illegal” move and vowing to fight against it, the two nuclear weaponposs­essing countries seem to be again on the brink of war.

Meanwhile, as the US unilateral­ly pulled out of the 2015 Iran nuclear deal, Tehran has restarted its nuclear program and begun enriching uranium beyond the agreed purity. After British authoritie­s seized an Iranian oil tanker in Gibraltar, Iran retaliated by seizing a British oil tanker in the Strait of Hormuz, heightenin­g the tensions surroundin­g the Persian Gulf.

Over in the UK, since Boris Johnson took over Theresa May as Prime Minister, the chances of a “hard Brexit” taking place on October 31 have significan­tly increased. Brexit’s developmen­ts will no doubt have a large impact on the UK, the EU and the rest of the world.

Lastly, the Us-china trade war has been ongoing for a year now. Trump has tried to pressure China by increasing tariffs, but the results have been questionab­le. Recently, the Trump administra­tion labelled China a currency manipulato­r, signaling possible financial warfare in the future.

Joseph Yam Chi-kwong, member of Executive Council and former Chief Executive of the Hong Kong Monetary Authority, said earlier that Hong Kong would be the most obvious battlefiel­d for a Us-china financial war. If his words come true, Hong Kong’s currency, stocks and property market would have to brace themselves for a massive storm. The ever-changing internatio­nal geopolitic­al landscape, like Hong Kong’s non-cooperatio­n movements currently taking place, can have a profound impact on the investment environmen­t. In addition to the continued social unrest unfolding in our home city, investors are advised to also keep a close eye on conflicts arising in other parts of the world.

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