TRADE WAR TRUCE EASES CONCERNS
Global stock market, currencies jump to highest levels in 3 weeks
THE 90-day truce between China and United States to resolve differences over trade issues is a positive move and eases concerns on the economy, said economists.
Global stock markets and currencies rose to the highest levels in three weeks in response to the decision by the world’s two largest economies, with market observers saying “it delayed some of the worst-case scenarios in trade relations”.
Bank Islam Malaysia Bhd’s chief economist Dr Mohd Afzanizam Abdul Rashid said the 90-day truce was crucial to enable further discussions between the two countries to find solutions to the ongoing trade frictions.
The 90-day period will be closely observed by the markets to see how far a “midpoint” would be achieved, especially on issues relating to intellectual property, technology transfers and security raised by the US.
He said a study by Bank Negara Malaysia found that the trade war between the US and China would have a negative impact on the global economy.
“Malaysia, which is an open economy from the perspective of trade and capital markets, would have been affected if the conflict had continued.
“This ‘trade halt’ should provide relief to the local economy,” he said.
Meanwhile, Malaysian Institute of Economic Research (MIER) senior researcher fellow Dr Zulkiply Omar said the US and China measures would only temporarily prevent further tariff imposition.
Hence, he said, the existing tariffs would continue.
“The effect will be to promote world trade, which will have a positive effect on the country’s exports,” he said.
MIDF Research said the temporary truce might help generate support to stimulate the equity market in the near future.
The research firm maintained its final projection at 1,800 points for the local stock market benchmark index for this year.