Investors Should Keep an Eye on Global Conflicts

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.