Today the Hong Kong markets suffered a sudden crash due to the violent turn in the pro-democratic protests in Hong Kong. According to the latest reports, there have been several victims, and the China-controlled police has started firing real bullets at the protesters.
Recall that it has been months since protests erupted in Hong Kong amid a controversial law that would have allowed China to persecute political fugitives in the otherwise autonomous Hong Kong. The independent city is a major financial and tourism hub, but due to the violence and disruption of public transport, its economy has been gradually deteriorating in the past months.
Meanwhile, China is currently focused on trade negotiations with the United States. Although last week hopes were high (and still remain so, to a certain extent) that the two sides will soon reach a phase-one trade agreement, this week the United States said it has not promised to roll back previous tariffs imposed on Chinese goods, nor to cancel the tariffs scheduled to come into effect on December 15. Donald Trump and Xi Jinping have not agreed on when and where to meet to sign the agreement yet.
Moreover, Trump has previously stated that he wants China to respect Hong Kong’s independence, and that he will not sign an agreement unless the protests are resolved peacefully. In light of the police’s use of ammunition and tear gas, it is unclear if Trump will want to meet his Chinese counterpart at all.
Today’s GDP report from the United Kingdom showed that in the third quarter, the economy grew by only 1%, less than 1.3% in Q2, and the forecast of 1.1%. The decrease is most likely due to the chaos of Brexit.
