As expected the Conservatives has regained control of the parliament, which reduced the level of uncertainty in UK. The Brexit Bill has passed the Second Reading at the Commons, but it remains to be seen whether the amended bill will be passed with Boris Johnson’s latest addition of ‘no further transition period extension’. Trade commissioner Phil Hogan dismissed Johnson’s idea of no extension claiming that the UK-EU trade deal negotiation will be impossible within 11 months.

Fundamentals remained weak. Eurozone manufacturing PMI improved yet stayed in the contraction zone for eleven consecutive months, the Euro Area Economic Sentiment Indicator, further recovered to 101.5 in December, showing the slightest signs of revitalization. Even though Brexit matters seemed to straighten out, the more complicated problem of negotiating a post-transition trade deal would follow the official Brexit, bringing more uncertainty to the region. Thus, with weaker fundamentals and more volatility, we see limited upside for the European markets in the short term.

At the moment, it is widely anticipated that the 1^st stage trade deal will be signed within January, even though the details are yet to be confirmed as of now. Both sides might seek temporary truce until the November elections.

The Presidential impeachment process continued, the Congress has passed articles of impeachment against Trump and officially impeached him. Nevertheless, with a Republican majority, the Senate is unlikely to remove Trump from office. Gallup found that the impeachment process likely fueled better support for Trump, possibly playing into Trump’s hands in the key swing states in the November election.

The fundamentals remain moderately stable. Although December consumer confidence missed market expectations, the record sales figures for Christmas shopping provided much needed market confidence, PMI figures also came in mostly exceeding expectations and staying well into the expansionary zone. Given the apparent relative stability in the US political landscape before the November elections, with the support from the dovish policies of the Fed lasting until 2020 Q2, we still see the US market as a relatively attractive investment option in 2020.

United States 

China and the United States signed the first stage trade deal this week, driving the equity market up, 3 major US stock indexes rose 1.18-1.67% over the past 5 days ending Thursday. The other market focus is the commencement of the 2019 Q4 earnings season, the financials led the charge with a majority having satisfactory report cards. In particular. JP Morgan Chase and Citibank's fixed income businesses have rebounded significantly in Q4. At the time of writing, about 64% of the 38 companies reporting in recorded better-than-expected net profit, indicating that corporate profits remains relatively healthy. Although the non-farm payroll figures in December missed market expectations, and wage growth was at the lowest point since 2018, with the satisfactory corporate earnings and the easing tensions between China and the United States, US equity indexes continued to set new record highs. The US Senate will kick off the President Impeachment process next Tuesday. In addition, the United States will also announce the manufacturing PMI for January 2020.

Europe 

European stock markets underperformed global markets over the past 5 days ending Thursday. Apart from the UK FTSE, both the French CAC and German DAX recorded declines. On Thursday, the European Central Bank (ECB) released the minutes of the first Interest Rate Decision after Lagarde became the president of the ECB. Members emphasized paying attention to the possible side effects of the current monetary policy, indicating some members have reservations about the current loose monetary policy. This cooled down the market sentiment in the Eurozone equities, limiting the performance over the week. As for economic data, the December UK consumer price index released this week in rose 1.3% YoY, which is lower than both the market expectation and previous value. The ECB will hold an interest rate meeting next week, and Germany will announce the January ZEW economic sentiment figures.

China

As for the Chinese and Hong Kong stock markets, the mainland stock market fell slightly over the week, while the Hong Kong stock market slightly rose. In light of easing tensions in the Middle East and the US's reversing China’s currency manipulator status, the Hang Seng Index continued its upward trend over the week. However, the first-phase Sino-US trade agreement was signed in Washington on Wednesday, and China promised to increase purchases of at least US$ 200 billion in US goods and services over the next two years. The general market is worried about China's ability to fulfill its commitments, the ambiguousness of the second-phase trade deal, coupled with profit taking in the market, the Chinese and Hong Kong stock markets narrowly edged up. In addition, the PBOC stated that it will continue to adopt a prudent monetary policy in 2020 to maintain the growth of money supply (M2) and financing scale. M2 in China increased by 8.7% YoY, exceeding market expectations. China also released December import and export data this week, exports grew by 9% YoY while imports grew by 17.7% YoY, both beating market expectations, the 2019 figure also set new record highs for the annual import and export figures. 2019 China GDP data was released this week, a YoY increase of 6.1% is in line with market growth expectations.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, Attended Bloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now FINTERVIEW”, “iCable Finance”, “iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News” , “ET Net”, “OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

United States 

Recently, the situation in the US and Iran came under spotlight, yet US stayed relatively unaffected. Over the past 5 days ending Thursday, the three major US stock indexes rose 0.3% to 1.2%. Although Iran launched rockets and missiles at US bases in Iraq early in the week, in retaliation for the death of the Quds Force commander, the situation in the Middle East showed early signs of de-escalation. The subsequent speech by US President Trump hinted that economic sanctions would be imposed on Iran, but no further military action would be taken. The increased geopolitical risks early in the week triggered capital inflows into safe-haven assets, such as the Japanese yen, gold, and US Treasury bonds.
Gold prices also rose to a six-year high. In addition, crude oil prices also benefited from the increase geopolitical risk, with the WTI crude oil breaking through the US$ 65 level. However, as the anxiety ebbed out, the prices of safe-haven assets retreated. At the time of writing, US equities are still hitting new record highs. Next week the US will release December inflation and retail sales data, the US economic outlook and corporate earnings in 2020 will be in focus.

Europe 

In Europe, the three major indexes had varied performance over the past 5 days ending Thursday. The British FTSE 100 fell 0.08%, the French CAC slightly increased by 0.02%, while the German DAX was further up at 0.82%. In the UK, Prime Minister Boris Johnson’s Brexit agreement was endorsed by the British House of Commons, the Bill has now been submitted to the House of Lords for the final vote, and the market atmosphere has improved. EU officials remained less optimistic over the whole Brexit matter, the EU representative stated that it is unlikely that post-Brexit negotiations on the trade deal could be completed within the 11 months of transition. Regarding the Bank of England’s monetary policy, Governor Carney pointed out that there is still plenty of room for adjustment, this includes “at least doubling” the central bank’s 60 billion pound asset purchase plan in August 2016. Next week, the UK and the Eurozone will release December inflation data.

China

As for the Chinese and Hong Kong stock markets, the mainland stock market steadily rose, while Hong Kong stocks have experienced large fluctuations. Due to the turn of events in the Middle East since last Friday, the HSI fell by more than 200 points on Monday. Subsequently, as geopolitical tensions eased, the Index rebounded over the week. Overall, both China and Hong Kong stock markets recorded gains this week. Regarding Sino-US trade relations, Chinese Deputy Prime Minister Liu He will lead a delegation to Washington D.C. to sign the first phase of the trade agreement on the 13th to 15th. Trump said that he would start the second phase of negotiations with China immediately. However, he added that relevant negotiations might drag on well until the US elections are over. China’s December CPI rose 4.5% YoY, which was lower than the original expectation of 4.7%. China will release Q4 GDP, December exports and fixed asset investment data next week.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, Attended Bloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now  FINTERVIEW”, “iCable Finance”, “iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News”  , “ET Net”, “OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

United States

Looking back on 2019, almost all global stock market indexes have recorded gains. Among them, the U.S. equity market ranked nearly at the forefront, with the Dow Jones, S&P500 and the Nasdaq indices rising 22.34%, 28.88% and 35.23% respectively. Sino-US trade dispute is one of the important events of 2019. Entering 2020, trade issues are still expected to dominate the market performance. According to the latest news, the White House's trade adviser says the US-China Phase 1 trade deal would likely be signed in the next week. In terms of recent economic data, the Conference Board Consumer Confidence Index was 126.5, which was lower than the previous data and also the market's survey of 128.5. The Fed will announce the minutes of the December meeting this Friday night, and the market is concerned about the repurchase plan and its interest rate policy outlook. Next week, the United States will announce the December ISM non-manufacturing index and the employment data.

Europe

The performance of European stock markets was mid-range among the peers in 2019. The European STOXX600 index rose by 23.16%, and the UK, French and German stock markets rose by 16.65%, 26.37%, and 25.48%, respectively. In terms of recent economic data, the Eurozone Markit Manufacturing Index fell slightly from 45.9 to 46.3 in December, which is also the 11th consecutive month below the 50 level, with output and orders falling. As for the exchange rate of the British pound, it recorded the best performance in the past 10 years in the fourth quarter of last year, rising about 8%, the largest increase since 2009. The main reason is that after the latest election in Britain, the risk of a no-deal Brexit has dropped significantly. However, the market is still concerned about the transition period at the end of 2020. The Eurozone will release data on consumer prices and unemployment rate next week.

China

2019 is a year when the performance of China and Hong Kong stock markets is quite different. The Shanghai and Shenzhen 300 Index rose by 36.07%, while the Hang Seng Index rose by only 9.07%. The market generally interprets the Hong Kong stock market as having a large ratio of overseas allocations, so it is more vulnerable to the impact of Sino-US trade frictions. However, the latest news indicates that the Chinese Deputy Prime Minister will lead a delegation to visit the United States this Saturday, and the market is expected to sign a trade agreement. In addition, supported by news that the People's Bank of China has cut interest rates, China and Hong Kong stock markets rose sharply on the first trading day of 2020. Earlier, the People's Bank of China (PBOC) announced it will cut banks' reserve requirement ratio (RRR) by 50 basis points, effective Jan. 6, releasing about 800 billion yuan of liquidity into the financial system. The Mainland will release data such as the consumer price index and the service PMI next week.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, Attended Bloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now FINTERVIEW”, “iCable Finance”,“iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News” , “ET Net”, “OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

United States 

Global stock markets showed signs of weakening. Earlier in the week, Trump pointed out that there is no deadline for the Sino-US agreement, implying that the agreement with China might only be signed as late as November 2020. This incident worried the markets that the United States might proceed with the new tariffs on Chinese goods as scheduled on 15th December, killing the last glimmer of hope on a tariff delay. Affected by this, the S&P 500 fell earlier this week, recording the largest single day drop in nearly eight weeks. Over the past 5 days ending Thursday, the three major US stock indexes fell 1.15% - 1.73%. In addition to trade concerns, economic data also weighed on US equities. Data showed that the US ISM manufacturing index contracted for the fourth consecutive month in November, while the ISM non-manufacturing index also fell below the previous value and market expectations during the same period, implying slowdown in both aspects of the economy. Next week, the United States will announce the November retail sales and consumer price index, the market expects that both data show positive results. In addition, the US Federal Reserve will also hold the interest rate meetings, which markets expect rates to remain unchanged..

Europe

While global stock markets dipped, the drop was further magnified in Europe. French and German stocks fell 1.9% and 1.4%, respectively; UK stocks went further down, falling 3.8%. In the UK, as polls in the UK showed that the Conservative Party still maintained the lead, the Pound rose sharply to the 1.3150 level. In addition, UK Prime Minister Boris Johnson also announced his plan for the first 100 days of his tenure, including plans to ‘complete’ Brexit before January 31, providing support to the Pound. In France, there was a general strike, mainly due to dissatisfaction over the government's revision of the retirement system. The European Central Bank (ECB) will hold its last 2019 interest rate discussion next week, the market expects interest rates to be kept unchanged.

China 

China and Hong Kong stock markets performed well. Despite the worsening global market sentiment at the beginning of the week, it was reported that the Chinese side maintained close communication with the US and the stock market rebounded. The mainland stock market outperformed HK markets, CSI 300 index nearly 2% this week, while the Hang Seng Index rose 0.6%. In the absence of a clear breakthrough in trade negotiations, data showed that the Sino-US trade volume further declined in October, and the US merchandise import quota from China also hit a three-year low. China will release CPI data next week, and the market expects the figure to further increase to 4.3% YoY.

• Recent activities include : Attended Bloomberg Businessweek/Chinese Edition Top Fund Awards 2019,   Attended iFAST’s annual symposium 2019 in Berlin Germany
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now  FINTERVIEW”, “iCable Finance”, “iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News”  , “ET Net”, “OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

United States

It was Thanksgiving and US stock markets were closed on Thursday. Before the holiday, all three major US stock indexes closed at consecutive record highs three days in a row. US President Trump eased tensions over Sino-US Trade talks, reassuring that both sides will reach the 1st stage agreement soon. Moreover, the Q3 finalised GDP of the United States was revised up to 2.1% QoQ, improving market sentiment, propelling the three major indexes up by 1.23% - 2.09% over the 5 days prior to the holiday. The US Federal Reserve Beige Book released this week also reported positive findings, stating that economic activity has expanded moderately and manufacturing has shown signs of improvement. That said, public hearings of the impeachment inquiry will conclude soon, the Democratic Party is considering to raise at least three impeachment charges. In addition, from a technical perspective, the 14-day RSI of the three major US stock indexes are all now above 70, indicating that the indexes are overbought. Next week, investors could pay attention to the US employment reports, ISM manufacturing & non-manufacturing indexes, and the University of Michigan market sentiment figures.

Europe

Global market sentiment improved and European stock markets rose. Over the past 5 days ending Thursday, the British FTSE 100 index rose 2.46%, the German DAX index gained 0.82%, and the French CAC index rose 0.54%. The European Union increased US beef import quotas on Monday, which is expected to help ease trade frictions between the US and EU. As for the UK, the latest polls showed that the Conservative Party has a higher chance of winning in the general election, stimulating the Pound surge over the week. In terms of economic data, the November German consumer price index for released this week rose 1.1% YoY and fell 0.8% MoM, both falling short of market expectations. Eurozone’s October retail sales data will be released next week.

China

Chinese and Hong Kong stock markets recorded mixed performance over the week. The Shanghai Composite Index broke below the 100-day moving average on Friday and tested the 200-day moving average at the 3800 level. As for the Hong Kong HSI, it broke below the 50-day moving average on the same day to around 26300. At the beginning of the week, the HSI was driven by the favorable atmosphere as Alibaba returned to the Hong Kong stock market, on Tuesday intraday the Index even briefly broke above the 27200 level, but it showed subsequent weakness and fell. In terms of governmental policies, when presiding over the meeting of the State Council Finance Committee, Chinese Vice Premier Liu He said that it is necessary to increase counter-cyclical adjustments while deepening the reform of capital markets and small & medium-sized banks. The markets remained hopeful for new economic stimulus policy launch in the mainland. Important economic figures to look out for next week include Caixin China Manufacturing and Services PMI.

• Recent activities include : Attended iFAST’s annual symposium 2019 in Berlin Germany, visit Mason Privatbank Liechtenstein office in Liechtenstein.
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now  FINTERVIEW”, “iCable Finance”, “iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News”  , “ET Net”, “OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

The economic indicators remains mixed, with the official manufacturing PMI dropping to 49.3, staying below the 50 level for 5 consecutive months, while the Caixin manufacturing PMI continued to improve. Industrial production remained resilient, but industrial profits continued to fall. The October PPI stayed negative, falling for 4 consecutive months, dealing further blows to the exporting sectors. The weakening profitability of the manufacturing industry continues to post a threat to the sector moving forward even though the trade conflict are showing signs of resolution.

As for China’s GDP growth, it continues to slowdown in Q3, continuing the trend since 2017 Q2, so there is speculation that there would be more policies in the near future to further boost the local economy. The PBOC announced a new round of Medium-term Loan Facilities (MLF) amounting to 400 billion CNY, matching the recently ended round of MLF in nominal amount, but lowered the interest rate for the first time in 3 years from 3.3% to 3.25%. The MLF interest rate cut carries a great significance as a number of other financing policies are derived from the rate as a benchmark, the cut could help further stimulate the economy. It is also expected that the PBOC would cut reserve ratios in the near future, the further loosening monetary policy could improve the general business environment and provide support to the markets. That said, Investors should continue to stay cautious as clouds are yet to clear regarding the trade conflict and economic slowdown.

United States

Sino-US trade negotiations showed signs of resolution, and the improving market sentiment pushed US equities to a historic high. Over the past 5 days ending Thursday, the Dow, S&P 500, and NASDAQ rose 2.32%, 1.57%, and 1.71% respectively. During Asian hours on Thursday, there were rumours that China and the United States will uplift the tariffs in place on both sides in stages, immediately boosting Asian equities, European and US equities also rose early on Thursday. Later on, it was reported that negotiations were still in progress, the time and place of signing the agreement have not yet been set. The US stock market retreated in the afternoon. As for economic data, the US figures were mixed. The October Markit US Service PMI reported a final value of 50.6, missing market expectations. However, the ISM non-manufacturing PMI in the same period reported 54.7, which improved over the previous period and was a positive surprise. Next week, the focus will be on the October US inflation data.

Europe

European markets outperformed global markets over the week. Over the past 5 days ending Thursday, the UK FTSE, French CAC, and German DAX gained nearly 2.2%, over 2.8%, and over 3.3% respectively. Regarding the Brexit drama, the general election will be held on 12^th Dec as the parliament is officially dissolved. While the Conservatives are still expected to lead the House of Commons after the coming election, market participants are waiting for elections results before making further judgements on UK’s economic future. The Bank of England announced no changes to the interest rate as the market expected, and the BoE is unlikely to cut rates in the remaining portion of the year. On the other side of the Channel, the German Market Manufacturing PMI slightly improved by 0.4 points to 42.1. While the figures are improving, the economic leader in the EU is still experiencing a contraction in the manufacturing sector for 9 consecutive months. More European economic data will be released next week, with multiple CPI and GDP figures coming out.

China

Driven by the progress in Sino-US trade negotiations, Hong Kong equities had a strong performance, the Hang Seng Index rose nearly 2% over the week. The PBOC lower the interest rate of MLF and it support the market sentiment. Also, sources reported that China and the United States would cancel the imposed tariffs in stages. The optimistic sentiment pushed the HSI to break through 200-day moving average, briefing hitting the 27900 level intraday. However, the Index retracted on Friday. Another focus this week is the strengthening of the Renminbi. At the moment, the mid price of the USD/CNH has broken though the 7 level and reported at 6.9813. Next week, there will be data on China's fixed asset investment, retail sales and industrial production.

US

The US corporate earnings period is slowly coming to an end. Among the 347 index constituents that have announced their Q3 results, more than 80% outperformed market expectations, and the overall market recorded a slight earnings increase YoY. Apple's quarterly results and sales exceeded market estimates, propelling the stock price upwards, and providing support to the tech sector. Coupling this with the better than expected US economic data, the S&P 500 hit a record high. Over the past 5 days ending Thursday, the Dow and S&P 500 gained 0.9%, while the tech based NASDAQ recorded a more significant increase of 1.3%. The FOMC meeting was held this week, interest rates were cut by 25 basis points as the market expected. The Fed Chairman Powell said that as long as inflation stays low, the Fed will not raise interest rates. According to the Bloomberg interest rate futures data, the probability of a rate cut in December has decreased to around 20%, which means that there is a low chance of another rate cut in 2019. In terms of economic figures, driven by strong consumer spending growth, the US GDP grew at an annual rate of 1.9% in Q3, surpassing the market expectation of 1.6%. US employment data will be released tonight, and we will get more data like services PMI next week.

Europe

As the Pound regained strength, the Pound denominated UK stock market fell under pressure, the UK FTSE 100 index fell more than 1% over the past 5 days ending Thursday, while the pan-European STOXX 600 index fell 0.16%. In the UK, after Prime Minister Boris Johnson accepted the EU's proposal to postpone the Brexit until 31^st January 2020, the House of Commons approved to hold the general election on 12^th December. With worries of a “No-deal Brexit” slowly ebbing out, the Pound regained strength and GBP/USD rebounded near the 1.30 level. In terms of economic data, the Eurozone's Q3 GDP rose 0.2% QoQ, outperforming expectations, while the October CPI rose 0.2% MoM, which was slightly higher than the expected 0.1%, indicating that the overall economic environment might have improved. The Bank of England will hold a meeting on interest rates next week.

China

As for China and Hong Kong markets this week, Hong Kong stocks posted a strong performance, while the mainland stocks underperformed. Over the past 5 days ending Thursday, the Hang Seng Index gained nearly 1%. At the beginning of this week, US President Donald Trump claimed that the Sino-US trade negotiations were progressing faster than planned. Unfortunately, the APEC summit was canceled by Chile, there are worries that the two powers might be unable to sign the first stage of the trade deal due to the cancellation. Trump later reassured that both sides are looking for new locations for the sign off. As we continue to get mixed signals from the official and Caixin manufacturing PMIs released this week, the foreign exchange reserves, import and export data releasing next week might offer a better insight into the economy.

• Recent activities include : Attended The Private Wealth Asia Forum, Harris Fraser Hong Kong Property Market Outlook and Investment Strategy Seminar and Press Conference, Taiwan Immigration Seminar etc.
• Media include : SCMP、imoney、AAStocks、TVB、HKEJ、MingPao、HKET、Metro Broadcast、Commercial Radio Hong Kong etc (including but not limited to the above)
• Publishing on newspapers, magazines and online sections : “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News” , “ET Net”, “OrangeNews”, “Quamnet” and online videos collaborated by Mason Securities limited and Harris Fraser Group.