2019-10-22 09:37:181970-01-01 00:00:00

Australia and the Trade War

On Thursday (13 June AEST), the Treasurer of Australia, Joshua Anthony Frydenberg, delivered a speech at the UK Policy Exchange Think Tank in London. He warned that the escalating trade tensions between the U.S. and China have “weighed on the global economic outlook and affected investment decisions, creating a degree of uncertainty”. In fact, according to the Australian government’s Department of Foreign Affairs and Trade, China is Australia’s largest export market, accounting for more than 30% of its exports in 2018. Frydenberg commented that the U.S.-China trade war has put Australia in a difficult position, and “ if we can have that uncertainty removed, it’s not only better for Australia but also better for the world.” Earlier, during the annual G20 Finance and Central Bank Deputies Meeting on June 08, 2019 in Fukuoka, Japan, Frydenberg urged the U.S. and China to resolve their trade war and mentioned that “from Australia’s perspective, given that China is our number one trading partner, and the U.S. is our number one investor, we want cool heads to prevail”.

The U.S. and China are two of the largest countries and economies in the world. Their economies are also completely intertwined. In the trade dispute, the U.S. demanded that China completely open all its markets, cut state subsidies to its companies, and respect intellectual properties. The Trump administration also threatened to impose more tariffs on Chinese imports unless Beijing could reduce $200 billion worth of goods in its trade surplus with the U.S. by 2020. American political commentator, Thomas Loren Friedman suggested that if the two countries begin to disrupt telecommunications connections, manufacturing supply chains, educational exchanges, and financial investments that have been made since the 1970s, the whole world will become less secure, less prosperous and less stable.

The trade tensions between the U.S. and China

On Monday (10 June), the U.S. President Donald Trump threatened to impose new tariffs on US$300 billion imports if Chinese president Xi Jinping does not agree to meet with him at the G20  Leaders’ Summit in Osaka on June 28-29. Both sides are supposed to hold crunch talks, but it is uncertain if they will make a deal. Last month, the highly controversial two-day talks between the two countries ended without a deal and the two sides slapped a new round of tariffs on each others’ imports. The U.S. had imposed a 25% tariff of US$200 billion on Chinese imports and took measures to impose an additional tariff of US$300 billion on Chinese goods. As a response, Beijing retaliated by hiking a 25% tariff of US$60 billion on U.S. imports. The data from the International Monetary Fund showed that the U.S.-China trade war could lead to a  $US 455 billion loss and cut global GDP by 0.5% in 2020. At the same time, the forecast from Commonwealth Bank indicated that if the U.S. and China were to tax each others’ imports at 25% and Mr Trump also took aim at the global auto industry, the world GDP would drop 0.25%.

On the other hand, the U.S. and China appeared to be engaged in a “tech cold war”. Following the ban on ZTE last year, Trump administration blocked Huawei last month, the largest telecommunication manufacturer in the world. Although Huawei was considered to be the leader in 5G, the U.S. government accused the Chinese telecoms equipment maker of espionage. Washington blamed Huawei being closely-linked to China’s Communist Party and its telecom equipment posing a national security risk. After Google, Intel, Qualcomm, and Broadcom collectively followed the executive order to ban Huawei, the analyst commented that the world is indeed splitting into two technology camps. 5G is generally seen as the fifth generation cellular network technology that provides super-fast download speeds and the ability to underpin new technologies like driverless cars. Both the  U.S. and China are battling to dominate the 5G market as the technology is the key to the future.

Australia’s economy amid the trade tensions

According to data from Bank of America, there was a 3% decline in the number of Chinese visitors to Australia in April. In addition, analysis from JPMorgan indicated that the U.S.-China trade war will shave 0.07% off Australia’s gross domestic 

product in the next two years. The Australian Gambling industry was one that was affected by the trade battle. The industry had experienced a plummet in revenues due to the decline in the number of Chinese high-rollers visits in their gambling venues.

Frydenberg reaffirmed that the Australian economy was well diversified and more than 70% of the economy was contributed from the service industry. For sectors with growth potential, the Treasurer awarded Australia’s larger fintech (financial technology) sectors, tourism, and education industry as really capitalizing on the growth in Asia. Moreover, he added that the rich resources in Australia such as iron ore, coal, and thermal had contributed significantly to the trading account.

By Steven Gao

Click here for a 7 days access to our Lotus Blue Portal.

KOSEC does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information provided. KOSEC is intended to provide general information only. Please be aware that investing involves the risk of capital loss. This message is confidential and may be privileged. It is intended only for the use of the addressee named above. If you are not the intended recipient, any unauthorised dissemination, distribution or copying is illegal. We do not guarantee the security or completeness of information hereby transmitted and are not liable in either respect or in respect of any delay. Nothing in this message is intended as an offer or solicitation for the purchase or sale of any financial instrument. Any market prices or data, unless specifically verified and identified as such, are not warranted as to completeness or accuracy. Kodari Securities Pty Ltd (KOSEC) is a Corporate Authorised Representative (No. 399 556) of Longhou Capital Markets (AFSL No. 292464) which is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC wishes to disclose that KOSEC and its staff may hold stock they recommend in their own portfolios and that any decision to purchase recommended stock should be done so after the purchaser has made their own inquires as to the suitability to their own requirements. Click here to view our FSG.

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial