In this edition of the Financial Porridge Podcast, veteran Market Commentator Bill Blain examines some of the critical market themes driving markets.
China and Hong Kong
While the World frets about how much damage the China/US trade spat is doing to the Global Economy, the place to watch is Hong Kong. Only two things matter: What will China do? And, how will the West react? The consequences of an all out Trade war and Economic Cold War will be highly damaging. However, rather than a bloody blow against demonstrators, the Chinese are more likely to employ their surveillance state and the kind of polices they’ve used elsewhere to marginalize dissent in order to preserve the advantages of Hong Kong as a Financial Centre. The Chinese will be quite happy for the protestors to go elsewhere.
Aviation has been very successful for the last 50 years, but now growth is slowing in line with economic slowdown – which we’ve seen before, but also a new factor Flight Shaming over the carbon emissions generated by flights. That spells a period of change in expectations for the number of flights, but also in the way airlines run and finance their fleets. This is critical when the global manufacturing duopoly of Boeing and Airbus is wondering how to react.
Cleaning the Oceans
The Environment and Climate Cure pose a host of problems for investors in terms not only of tech risks, but also how they get paid. It’s a classic Public Good. Ocean cleanup tech is a good example – extracting plastic from the oceans will benefit everyone, but who will pay for processing plastic and how to encourage investment. These things are happening – the tech exists and it will get done.
Politics seems to get more fraxious every day with more and more outlandish threats and claims about policies and who said what and where, every day. Does it actually matter – sadly it does. The trick is to try and see beyond the political nonsense and work out what is really going on.