Trade Optimism Lifts Stocks, But 2018 Ends in Red

Equities around the world rose Monday as possible progress in resolving the trade dispute between the United States and China engendered some investor optimism in what has been a punishing end of year for markets.

The U.S. benchmark S&P 500 stock index advanced in light trading volume after U.S. President Donald Trump said he held a “very good call” with China’s President Xi Jinping on Saturday to discuss trade and said “big progress” was being made.

Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other halfway and reach an agreement that was mutually beneficial.

The rise in U.S. equities mirrored that in Asian and European markets, which were also buoyed by trade optimism.

Despite Monday’s advance, equities ended the year largely in the red, victims of investor anxiety over trade tensions and slowing economic growth. Asian and European shares had been sluggish for much of the year, and in recent months, U.S. stocks followed suit.

“If the European economy continues to decelerate and the Chinese economy decelerates because of tariffs, there is definitely going to be spillover to the United States,” said Shannon Saccocia, chief investment officer at Boston Private.

The S&P 500 dropped more than 9 percent in December, its largest decline since the Great Depression. For the year, the index slid more than 6 percent, its biggest drop since the 2008 financial crisis.

Asia-Pacific shares outside Japan ended down 16 percent for the year, while the STOXX 600 was more than 13 percent lower.

MSCI’s gauge of stocks around the globe fell 11.1 percent in 2018.

A further blow to the Chinese economy could spur a quicker resolution to the U.S.-China trade dispute and thus boost global equities, Saccocia said. Survey data on Monday showed Chinese manufacturing activity contracting for the first time in two years even as the service sector improved.

On Monday, the Dow Jones Industrial Average rose 265.06 points, or 1.15 percent, to 23,327.46, the S&P 500 gained 21.11 points, or 0.85 percent, to 2,506.85 and the Nasdaq Composite added 50.76 points, or 0.77 percent, to 6,635.28.

MSCI’s emerging markets index rose 0.32 percent, while the MSCI world stock index gained 0.66 percent.

No more hikes

Yields on U.S. Treasuries fell on Monday, keeping with the trend over the past two months as investors moved to lower-risk investments.

Benchmark 10-year notes last rose 15/32 in price to yield 2.686 percent, compared with 2.738 percent late Friday.

The fall in Treasury yields reflects expectations of a slowdown, if not a pause altogether, in the Federal Reserve’s progression of interest-rate hikes.

The precipitous drop in yields has undermined the U.S. dollar in recent weeks. The dollar index, which measures the greenback against a basket of six other currencies, was down 0.3 percent and on track to end December with a loss. It is, however, still set for its highest yearly percentage gain since 2015.

On Monday, the dollar fell to a six-month low against the yen.

The euro was up 0.2 percent to $1.1459, on track to end the year down nearly 5 percent against the dollar.

Oil posted its first year of losses since 2015, with Brent crude futures down 19.5 percent and U.S. West Texas Intermediate crude futures down 24.8 percent.

On Monday, Brent crude settled 59 cents higher, or 1.11 percent, at $53.80 a barrel. U.S. crude settled up 8 cents, or 0.18 percent, at $45.41 a barrel.

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China Factory Activity Shrinks for First Time in 2 Years

China’s factory activity shrank in December for the first time in more than two years, an official survey showed Monday, intensifying pressure on Beijing to reverse an economic slowdown as it enters trade talks with the Trump administration.

The purchasing managers’ index of the National Bureau of Statistics and an industry group, the China Federation of Logistics & Purchasing, fell to 49.4 from November’s 50.0 on a 100-point scale. Any reading below 50 shows that activity is contracting. The December figure was the lowest since February 2016 and the first drop since July 2016.

 

In the quarter that ended in September, China’s economic growth sank to a post-global crisis low of 6.5 percent compared with a year earlier. The slowdown occurred despite government efforts to stem the downturn by ordering banks to lend more and by boosting spending on public works construction.

 

Forecasters expect annual growth of about 6.5 percent, down slightly from 2017’s 6.7 percent. But some industry segments, including auto and real estate sales, have suffered more serious declines.

 

“Downward pressure on the economy is still large,” economist Zhang Liqun said in a statement issued with the PMI.

 

Overall orders and exports both contracted, indicating that Chinese factories are suffering from weak demand at home and abroad. Exports to the United States kept growing at double-digit monthly rates through late 2018 despite President Donald Trump’s punitive tariffs. But growth in exports to the rest of the world fell sharply in November and forecasters expect American demand to weaken in early 2019.

 

That adds to complications for Chinese leaders who are trying to reverse a broad economic slowdown and avert politically dangerous job losses.

 

Chinese and U.S. envoys are due to meet in early January for negotiations that are intended to resolve their economically threatening trade war. Over the weekend, Trump sounded an optimistic note, tweeting that he had spoken with President Xi Jinping by phone.

 

“Deal is moving along very well,” Trump tweeted. “If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!”

 

But economists say the 90-day moratorium on new penalties that was agreed to by Trump and Xi on Dec. 1 is likely too little time to resolve their sprawling dispute.

 

Chinese economic activity already was weakening after Beijing tightened controls on bank lending in late 2017 to cool a debt boom. The downturn was more abrupt than expected, which prompted regulators to shift course and ease credit controls. But they moved gradually to avoid reigniting a rise in debt. Their measures have yet to put a floor under declining growth.

 

Chinese leaders promised at an annual economic planning meeting in mid-December to shore up growth with tax cuts, easier lending for entrepreneurs and other steps.

 

 

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Kenyan GDP Growth at 6 Percent in Third Quarter 2018

Kenya’s economy expanded faster in the third quarter of this year than in the same period last year due to strong performance in the agriculture and construction sectors, the statistics office said on Monday.

The Kenya National Bureau of Statistics said the economy grew 6 percent in the third quarter of 2018, compared with 4.7 percent in the same period in 2017.

It said the agriculture sector expanded by 5.2 percent compared with 3.7 percent in the third quarter of 2017, helped by better weather.

“Prices of key food crops remained low during the quarter compared to the corresponding quarter of 2017, an indication of relative stability in supply,” KNBS said.

Manufacturing grew by 3.2 percent from a 0.1 percent contraction in the third quarter of 2017, KNBS said.

It said that the electricity and water supply sector grew by 8.5 percent from 4.5 percent in the third quarter of 2017, mainly due to a big increase in the generation of electricity from hydro and geothermal sources.

Gross foreign reserves increased to 1,222.5 billion from 1,085.6 billion in the same period of last year.

The current account deficit narrowed by 23 percent to 116 billion Kenyan shillings ($1.14 billion), it said.

This was mainly due to lower imports of food and higher value of exports of goods and services.

The government forecasts that the economy will expand by 6.2 percent in 2019, up from a forecast 6.0 percent this year.

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A Big Build-Up to a Big Drop: The Times Square New Year’s Ball

An estimated 1 million people will pack New York City’s Times Square to watch the huge, brilliantly lighted, crystal ball drop to signal the start of the new year. It is an American New Year’s tradition that goes back more than a century. As VOA’s Kevin Enochs reports, lot of work goes into making sure that ball lights up the sky in spectacular fashion, exactly on time.

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Young Libyan Women Play for Equal Rights on the Soccer Field

Young women looking to play the world’s most-popular sport have a place all their own in Libya. An all-girls soccer academy in the capital looks to break societal norms in the Muslim majority country that frown upon women wearing shorts or competing on the same fields as men. But it is not without criticism that coaches turn constructive. Arash Arabasadi reports.

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Nigeria Targets 26M People in Yellow Fever Campaign

Nigeria’s campaign to vaccinate more people against yellow fever appears to be making headway. The government is partnering with the World Health Organization (WHO), Gavi, the Vaccine Alliance and UNICEF to immunize more than 26 million people. It is the second phase of Nigeria’s preventive campaign after a yellow fever outbreak in September 2017. Timothy Obiezu has more from Abuja.

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The Euro Currency Turns 20 Years Old on Tuesday

The euro currency turns 20 years old on January 1, surviving two tumultuous decades and becoming the world’s No. 2 currency.

After 20 years, the euro has become a fixture in financial markets, although it remains behind the dollar, which dominates the world’s market.

The euro has weathered several major challenges, including difficulties at its launch, the 2008 financial crisis, and a eurozone debt crisis that culminated in bailouts of several countries.

Those crises tested the unity of the eurozone, the 19 European Union countries that use the euro. While some analysts say the turmoil and the euro’s resilience has strengthened the currency and made it less susceptible to future troubles, other observers say the euro will remain fragile unless there is more eurozone integration.

Beginnings 

The euro was born on January 1, 1999, existing initially only as a virtual currency used in financial transactions. Europeans began using the currency in their wallets three years later when the first Euro notes and coins were introduced.

At that time, only 11 member states were using the currency and had to qualify by meeting the requirements for limits on debt, deficits and inflation. EU members Britain and Denmark received opt-outs ahead of the currency’s creation.

The currency is now used by over 340 million people in 19 European Union countries, which are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

Other EU members are required to join the eurozone when they meet the currency’s monetary requirements.

Popularity

Today, the euro is the most popular than it has ever been over the past two decades, despite the rise of populist movements in several European countries that express skepticism toward the European Union.

In a November survey for the European Central Bank, 64 percent of respondents across the eurozone said the euro was a good thing for their country. Nearly three-quarters of respondents said they thought the euro was a good thing for Europe.

In only two countries — Lithuania and Cyprus — did a majority of people think the euro is a bad thing for their nation.

That is a big contrast to 2010, the year that both Greece and Ireland were receiving international bailout packages, when only 51 percent of respondents thought the euro was a good thing for their country.

Challenges

The euro faced immediate challenges at its beginning with predictions that the European Central Bank (ECB) was too rigid in its policy and that the currency would quickly fail. The currency wasn’t immediately loved in European homes and businesses either with many perceiving its arrival as a price hike on common goods.

Less than two years after the euro was launched — valued at $1.1747 to the U.S. dollar — it had lost 30 percent of its value and was worth just $0.8240 to the U.S. dollar. The ECB was able to intervene to successfully stop the euro from plunging further.

The biggest challenge to the block was the 2008 financial crisis, which then triggered a eurozone debt crisis that culminated in bailouts of several countries.

Tens of billions of euros were loaned to Greece, Ireland, Portugal, Cyprus and Spain, either because those countries ran out of money to save their own banks or because investors no longer wanted to invest in those nations.

The turmoil also highlighted the economic disparity between member states, particularly between the wealthier north and the debt-laden southern nations.

Poorer countries experienced both the advantages and disadvantages to being in the eurozone.

Poorer countries immediately benefited from joining the union, saving trillions of euros due to the lowering borrowing costs the new currency offered.

However, during times of economic downturn, they had fewer options to reverse the turmoil.

Typically in a financial crisis, a country’s currency would plunge, making its goods more competitive and allowing the economy to stabilize. But in the eurozone, the currency in poorer countries cannot devalue because stronger economies like Germany keep it higher.

Experts said the turbulent times of the debt crisis exposed some of the original flaws of the euro project.

However, the euro survived the financial crisis through a combination of steps from the ECB that included negative interest rates, trillions of euros in cheap loans to banks and buying more than 2.6 trillion euros in government and corporate bonds.

Future

ECB chief Mario Draghi was credited with saving the euro in 2012 when he said the bank would do “whatever it takes” to preserve the currency.

Some experts say the flexibility of the bank proves it is able to weather financial challenges and say the turmoil of the past two decades have left the ECB better able to deal with future crises.

However, other observers say that the 19 single currency nations have not done enough to carry out political reforms necessary to better enable the countries to work together on fiscal policy and to prepare for future downturns.

Proposals for greater coordination, including a eurozone banking union as well as a eurozone budget are still in the planning phases.

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New Year’s Eve Ball Drop to Honor Journalism

A group of journalists will usher in the New Year Monday in New York City’s Times Square as the time-honored tradition of the annual ball drop recognizes journalism and free speech.

Leading American reporters and editors will be on stage just before midnight to push the button that begins the countdown to the New Year.

According to the Committee to Protect Journalists, at least 53 journalists were killed on the job in 2018 and another 251 were imprisoned around the world.

In another first, New York police will use a drone to monitor the crowds. The camera-carrying drone will be added to the arsenal of more than 1,200 fixed video cameras that will be deployed by the police.

The security plan also includes road closures, thousands of uniformed and plainclothes officers, sharpshooters on rooftops of surrounding buildings and the sealing of manhole covers.

On Sunday, officials did a test run of the 544-kilogram ball sliding down a pole. This year’s ball will feature 2,688 crystal triangles and is backlit with LED lights capable of producing a number of colors and patterns.

New York Mayor Bill de Blasio said Friday that the city expecting “up to 2 million people in Times Square itself” for the celebration.

 

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NASA Probe to Make History New Year’s Day

NASA scientists are getting a very special New Year’s Day gift. The New Horizons spacecraft is moving into unexplored space beyond Neptune to investigate objects so far out in our solar system they can hardly be seen by telescope. As VOA’s Kevin Enochs reports, the trip far out in space may help scientists figure out how the solar system was created.

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Tiny Tracking Devices Help Protect Endangered Species From Poaching

A French technology company has created a tiny tracking device to combat poaching. The tracker is smaller, lighter and cheaper than previous methods, such as radio collars. The creators say the technology can also allow those in remote villages to share information on the internet regardless of language or literacy barriers. Arash Arabasadi reports.

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Elections, Films Help Effort to Ban Gay Conversion Therapy 

Activists urging more states to ban gay conversion therapy for minors are expecting major gains in 2019, thanks to midterm election results and the buzz generated by two well-reviewed films. 

 

Fourteen states and the District of Columbia have already enacted laws prohibiting licensed therapists from trying to change a minor’s sexual orientation. Leaders of a national campaign to ban the practice are hopeful that at least four more states — Colorado, Maine, Massachusetts and New York — will join the ranks in the upcoming legislative sessions. 

 

“We’d be disappointed if we don’t get those this year — they’re overdue,” said Shannon Minter, legal director of the National Center for Lesbian Rights, one of the groups campaigning to impose bans in all 50 states. 

 

The campaign has gained momentum in recent months thanks to the national release of two films dramatizing the experiences of youths who went through conversion therapy — The Miseducation of Cameron Post and the higher-profile Boy Erased starring Lucas Hedges, Nicole Kidman and Russell Crowe. 

Joining ‘in droves’

Sam Brinton of the Trevor Project, another of groups leading the ban campaign, said thousands of people have signed up to assist the effort since Boy Erased was released on Nov. 2. 

 

“They’re recognizing this is still a problem and joining our campaigns in droves,” said Brinton, a child of Baptist missionary parents who has written about agonizing conversion therapy sessions experienced as an adolescent in Florida. 

 

Brinton recalls being bound to a table by the therapist for applications of ice, heat and electricity. 

 

Just four days after the Boy Erased release came the midterm elections, which altered the partisan political dynamic at several statehouses and boosted prospects for conversion therapy bans.  

In three of the states now being targeted, previous efforts to enact a ban gained some bipartisan support but were thwarted by powerful Republicans. In Maine, a bill was vetoed last year by GOP Gov. Paul LePage. In New York and Colorado, bills approved in the Democratic-led lower chambers of the legislature died in the Republican-controlled state senates. 

 

In January, however, a Democrat will succeed LePage as Maine’s governor, and Democrats will have control of both legislative chambers in New York and in Colorado, where gay Gov.-elect Jared Polis is believed eager to sign a ban. 

A lead sponsor of the New York ban bill, Democratic Sen. Brad Hoylman, predicted passage would be “straightforward” now that his party controls the Senate. 

 

“For a lot of my colleagues, they consider conversion therapy to be child abuse,” he said. 

Outlook in Massachusetts

 

In Massachusetts, both legislative chambers voted last year in support of a ban but were unable to reconcile different versions of the measure before adjournment. Chances of passage in 2019 are considered strong, and Republican Gov. Charlie Baker, who was re-elected, is viewed as likely to sign such a measure given his strong support for LGBT rights. 

 

More Republican governors like Baker are getting behind the bans, reflecting activists’ belief that opposition to conversion therapy is increasingly bipartisan. 

 

Bills proposing bans are pending or anticipated in several GOP-controlled legislatures, including Florida, Ohio and Utah. LGBT activists are particularly intrigued by Utah because of the possibility that the powerful Mormon church, which in the past supported conversion therapy, might endorse a bill to ban the practice for minors. 

 

In Florida, the proposed ban faces long odds in the legislature in 2019, but activists note that about 20 Florida cities and counties have passed local bans — more than in any other state. 

 

In Ohio, supporters of a bill that would ban conversion therapy for minors realize they have an uphill fight in a legislature with GOP supermajorities.  

 

Still, Sen. Charleta Tavares, a Columbus Democrat, believes her proposal got “new legs” in November. That’s when the state board overseeing counselors, social workers, and marriage and family therapists warned the 40,000 professionals it regulates that anyone found practicing conversion therapy on LGBT patients could lose his or her license.  

 

“I am glad to see that our state boards are carrying this movement, regardless of the inaction by our General Assembly,” Tavares said.  

 

For now, LGBT activists are not seeking to ban conversion therapy for adults. A gay California legislator, Evan Low, withdrew a bill he introduced earlier this year that would have declared conversion therapy a fraudulent practice and banned commercial use of it for adults and minors. Some opponents had threatened to sue to block the bill, saying it would jeopardize free speech and free exercise of religion. 

​Model for movie

 

Low says he may try again after revising his bill. If so, his arguments could be bolstered by input from John Smid, the real-life model for the Boy Erased character who ran a coercive conversion therapy program. 

 

For years, Smid was director of Tennessee-based Love in Action, a ministry that operated such a program. Smid left the organization in 2008. He subsequently renounced the concept that sexual orientation could be changed and apologized for any harm he had caused. In 2014, he married his same-sex partner, with whom he lives in Texas. 

 

Smid recently cooperated with a law firm as it compiled a report about Love in Action for the Washington-based Mattachine Society, which studies past instances of anti-LGBT persecution. 

 

One of the report’s co-authors, Lisa Linsky, said Smid depicted Love in Action as “a complete and utter failure,” with none of its participants actually changing sexual orientation. 

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Trump Says ‘Big Progress’ on Possible China Trade Deal

U.S. President Donald Trump said on Twitter on Saturday that he had a “long and very good call” with Chinese President Xi Jinping and that a possible trade deal between the United States and China was progressing well.

As a partial shutdown of the U.S. government entered its eighth day, with no quick end in sight, the Republican president was in Washington, sending out tweets attacking Democrats and talking up possibly improved relations with China.

The two nations have been in a trade war for much of 2018 that has seen the flow of hundreds of billions of dollars worth of goods between the world’s two largest economies disrupted by tariffs.

Trump and Xi agreed to a ceasefire in the trade war, agreeing to hold off on imposing more tariffs for 90 days starting Dec. 1 while they negotiate a deal to end the dispute following months of escalating tensions.

“Just had a long and very good call with President Xi of China,” Trump wrote. “Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!” Chinese state media also said Xi and Trump spoke on Saturday, and quoted Xi as saying that teams from both countries have been working to implement a consensus reached with Trump.

Chinese media also quoted Xi as saying that he hopes both sides can meet each other half way and reach an agreement that is mutually beneficial as soon as possible.

Having canceled his plans to travel to his estate in Florida for the holidays because of the government shutdown that started on Dec. 22, Trump tweeted, “I am in the White House waiting for the Democrats to come on over and make a deal.”

The Republican-controlled Congress was closed for the weekend and few lawmakers were in the capital.

The shutdown, affecting about one-quarter of the federal government including 800,000 or so workers, began when funding for several agencies expired.

Congress must pass legislation to restore that funding, but has not done so due to a dispute over Trump’s demand that the bill include $5 billion in taxpayer money to help pay for a wall he wants to build along the U.S.-Mexico border.

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DRC Protests Hamper Ebola Epidemic Response

The World Health Organization says violent protests in DR Congo’s conflict-ridden North Kivu Province are hampering efforts to control the spread of the Ebola virus.  Protests erupted Thursday in response to the government’s decision to delay presidential elections in the region until March.

 

The World Health Organization reports anti-government protests in the towns of Beni and Butembo in North Kivu in the eastern Democratic Republic of Congo are having a serious impact on the Ebola response operation.   It says critical field work is being disrupted; including vaccinations, contact tracing, and checking on people who have been potentially exposed to the deadly virus. 

 

WHO spokesman Tarek Jasarevic says an Ebola transit center in Beni was attacked, frightening people waiting for test results and the staff caring for them.  He tells VOA the violence is an unfortunate setback to Ebola control efforts, which have been progressing.

“All gains that we have made so far in fighting Ebola in North Kivu are at risk because of this violence… And, in recent weeks, we were quite optimistic about Beni city because we have seen some decrease in numbers.  However, now again with this surge in violence, we may again lose these gains,” said Jasarevic.

Latest figures from the DRC Ministry of Health put the number of Ebola cases at 593, including 359 deaths — a fatality rate of 60 percent.  Another 203 people reportedly have recovered from Ebola.

The outbreak in North Kivu was declared five months ago on August 1.  More than 1,000 health workers from the Ministry of Health, the World Health Organization and other agencies are on the ground trying to stop the disease from spreading.  

Jasarevic says a lot of work lies ahead before the epidemic can be brought under control.   For that to happen, he says, it is important that health workers have access to the population and that their security is assured.

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Farmers Risk Loss of Federal Payments, Loans, From Shutdown

The end of 2018 seemed to signal good things to come for America’s farmers. Fresh off the passage of the farm bill, which reauthorized agriculture, conservation and safety net programs, the Agriculture Department last week announced a second round of direct payments to growers hardest hit by President Donald Trump’s trade war with China.

Then parts of the government shut down.

The USDA in a statement issued last week assured farmers that checks would continue to go out during the first week of the shutdown. But direct payments for farmers who haven’t certified production, as well as farm loans and disaster assistance programs, will be put on hold beginning next week, and won’t start up again until the government reopens.

There is little chance of the government shutdown ending soon. Trump and Congress are no closer to reaching a deal over his demand for border wall money, and both sides say the impasse could drag well into January.

Although certain vital USDA programs will remain operational in the short term, that could change if the shutdown lasts for more than a few weeks.

The Supplemental Nutrition Assistance Program, or food stamps, helps feed roughly 40 million Americans. According to the USDA, eligible recipients are guaranteed benefits through January. Other feeding programs, including WIC, which provides food aid and nutrition counseling for pregnant women, new mothers and children, and food distribution programs on Indian reservations, will continue on a local level, but additional federal funding won’t be provided. School lunch programs will continue through February.

USDA has earmarked about $9.5 billion in direct payments for growers of soybeans, corn, wheat, sorghum and other commodities most affected by tariffs. The first round of payments went out in September. The deadline to sign up for the second round of payments is January 15.

The impact of the shutdown, which began shortly before most federal workers were scheduled for a holiday break, started coming into focus by midweek.

About 420,000 employees are working without pay, while 380,000 are being forced to stay home. In the past, federal employees have been paid retroactively. But government contractors won’t get paid for hours they’ll lose staying home, causing problems for those who rely on hourly wages.

In anticipation of the financial bind many federal workers and contractors may soon find themselves in, the Office of Personnel Management offered some advice: haggle with landlords, creditors and mortgage companies for lower payments until the shutdown is over.

The shutdown also is affecting national parks, although unevenly: Some remain accessible with bare-bones staffing levels, some are operating with money from states or charitable groups, while others are locked off.

 

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Hong Kong Economy Caught in US-China Trade Crossfire

The storm winds of the recent trade war between the United States and China have settled in a truce for now, but the weeks of agitation — of rising tariffs and counter duties — battered one economy close to Beijing: Hong Kong’s.

In December, Hong Kong government economist Andrew Au said he anticipated near-term troubles for the territory’s economic forecast. GDP growth — a year after a record high of 341.5 billion — slowed significantly, from 4.6 percent growth in the first quarter to 2.9 percent in the third.

The government says the impact of the trade war can be seen in consumer prices, slower spending and lighter trade. Consumer price inflation ticked up 2.8 percent in the third quarter. The government warned that inflation could head upward as local costs rise along with residential rental rates.

Kelvin Ho-Por Lam, a former economist with HSBC based in Hong Kong, predicted another problem for Hong Kong from overseas.

Double whammy

“It’s not just the trade war, it’s facing a double whammy at the moment,” Lam said. “The trade war impacts on this economy, which is showing up in this Hong Kong GDP over the last two quarters. The second impact is from rising interest rates in the U.S.” The Federal Reserve raised rates four times in 12 months. A slower U.S. economy means less buying from China.

Adding to the impact is great unease. 

“It poses uncertainty on the economic agents in society. Businesses are more concerned going ahead with their investment plans,” Lam said. “They’re shelving their investments and therefore they are not investing in capacity in Hong Kong or in China.”

Trade and logistics — the apparatus to move the shoes and dresses and smartphones from Chinese factories to markets worldwide — are central to Hong Kong’s economy. The sector accounts for nearly one-fifth of the city’s GDP, higher than the substantial financial and banking industry here. When tariffs hit, goods cost more to sell in the United States, which means companies decrease stock and consumers buy less.

China’s economic growth weakened in the third quarter from a year earlier, its lowest expansion since the global financial crisis in 2008.

Consumers wary

Clearly consumers are wary. Retail sales in Hong Kong, the semi-autonomous Chinese territory, grew in September at their slowest pace in 15 months. Also hurting the city was substantial damage from typhoon Mangkhut.

Favorite shops of mainland tourists — Sa Sa International, Chow Tai Food Jewelry, and Luk Fook Holdings, all posted slowed sales in the third quarter.

Hong Kong also saw its economy lag for local reasons. Home prices in what is often called the world’s least affordable market chilled this year as interest rates rose. The number of residential property transactions fell by 24 percent from 18,900 in the second quarter to 14,400 in the third quarter, according to the government.

Property sellers saw the slowdown in sales set in this summer, after the residential property market had churned hard for 28 consecutive months. Median home prices dropped by as much as 5 percent from June, agents told the South China Morning Post in October. The city’s rating and valuation Index, which tracks prices of older homes, in August marked the first monthly decline in more than two years. Even the government offered discounts. A 97,300-square-foot plot of the former Kai Tak airport in the city’s Kowloon district sold for $1.03 billion to a unit of China Overseas Land & Investment, nearly 13 percent lower than another Kai Tak sale in November.

The market chill began in August after Carrie Lam, Hong Kong’s chief executive, introduced a tax to compel developers to create more housing. Meanwhile, banks raised mortgage rates for the first time in 12 years.

That means mortgage holders have less extra money to spend, Kelvin Lam said. He forecast that there will be fewer tourists visiting Hong Kong, perhaps because of the volatility in China.

“The Hong Kong economy is very sensitive to these things,” he said. “It will reduce people spending for their own personal consumption.”

​Folded into China’s economy

Hong Kong produces very little domestically, Kelvin Lam pointed out. Lam said because the territory’s economy is so entwined with China’s, and because the range of products and services are so narrow, the impact of the extra tariffs will be felt on whatever the city acquires from China and re-exports.

Hong Kong is likely to suffer more during China’s downturns as the former British colony is folded into China’s economy and as the government plans for a massive technology hub to be rooted in nearby Shenzhen.

Andrew Sheng, a distinguished fellow at the Asia Global Institute at the University of Hong Kong, wrote in an email that he didn’t think the city would encounter much inflation, despite the downward pressure coming from lower property prices and a slowing global economy.

“The Hong Kong economy will suffer from the trade conflict,” said the former central banker and financial regulator in Asia. “Although it is very resilient to overseas shocks.”

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Social Media’s Year of Falling From Grace

Silicon Valley has enjoyed years of popularity and growing markets.

But 2018 has been rocky for the industry.

Data breaches, controversies over offensive speech and misinformation — as well as reports of foreign operatives’ use of their services — have left many people skeptical about the benefits of social media, experts say.

Worries about social media in Congress meant tech executives had to testify before committees several times this year.

“2018 has been a challenging year for tech companies and consumers alike,” said Pantas Sutardja, chief executive of LatticeWork Inc., a data storage firm. “Company CEOs being called to Congress for hearings and promising profusely to fix the problems of data breach but still cannot do it.”

 

WATCH: Social Media’s Year of Falling From Grace

An apology tour

Facebook drew the most scrutiny. The social networking giant endured criticism after revelations that its lax oversight allowed a political consulting firm to exploit millions of its users’ data.

In the spring, Mark Zuckerberg, Facebook’s chief executive, went on what was dubbed “an apology tour” to tell users that the company would do a better job of protecting their data.

The California firm faced other problems when data breaches at the site compromised user information. Other sharp criticism hit Facebook when false reports on its site sparked violence in places like Myanmar and Sri Lanka.

​Using social media to sow division

“Are America’s technology companies serving as instruments of freedom?” asked Kevin McCarthy, R-California and the House Majority Leader during a congressional hearing. “Or are they serving as instruments of manipulation used by powerful interests and foreign governments to rob the people of their power, agency, and dignity?”

Adding to concerns, the year saw new revelations of foreign operatives using social media to secretly spread divisive and often bogus messages in the U.S. and worldwide.

“It doesn’t matter to whose benefit they were operating,” said Walt Mossberg, a former tech columnist with the Wall Street Journal. “What bothers people here is that a foreign country, using our social networks, digital products and services that we have come to feel comfortable in … has come in and used that against us.”

​Tech workers stand up

In addition to data privacy and misinformation, online speech became a big issue this year. Under pressure, social media companies like YouTube, Twitter and Facebook’s Instagram tightened restrictions on the kinds of speech they tolerate on their sites.

Tech workers pressed managers about their company’s government contracts, and Google workers staged a worldwide walkout over the treatment of female colleagues.

The issue of user data has led some companies such as LatticeWork, a data storage firm, to create new ways for users to protect their data and themselves. Playing off people’s concerns about data, LatticeWorks markets its products as a way to “bring your data home.”

#DeleteFacebook?

What’s unclear however is whether concerns about personal data and tech company decisions will spur users to leave these services. Facebook revelations prompted some like Mossberg to give up Facebook and its other services such as Instagram. He wants federal law to limit U.S. internet firms collection and use of user data.

“Governments and citizens of countries around the world need the right to regulate them without closing down free speech,” he said. “And that’s tricky.”

Some congressional members have vowed to pass a federal data privacy bill in the coming year, something that tech firms say they support.

But whether new regulations build trust in digital services remains to be seen.

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