Mexico’s tariff news follows reports of the US administration planning to impose rules of origin for indirect shipments.
Natixis Asia Pacific Chief Economist Alicia Garcia Herrero commented on China’s outlook for terms of trade, stating:
“Rerouting will be much harder in the second half. So that’s going to hit Chinese exports indirectly. So, that’s why the second half is tougher and the government has been preparing.”
The latest trade developments came as the US and China prepare for the next round of trade talks. China’s chief trade negotiator Li Chenggang plans to return to Washington to discuss trade terms. The outcome of trade talks could be crucial given China’s reliance on ‘third countries’ and tariffs targeting Chinese shipments.
Mainland Stock Markets Resume Move Toward Record Highs
On Wednesday, August 27, Mainland China’s CSI 300 and the Shanghai Composite Index pulled back 1.49% and 1.76%, respectively, after briefly reaching new year-to-date highs.
Despite the retreat, optimism over Beijing’s 5% GDP growth target, supported by policy measures, continues to bolster demand for Mainland-listed stocks. The CSI 300 and the Shanghai Composite were up 1.19% and 0.58%, respectively, during the August 28 morning session.
Both indexes continue to outperform the Nasdaq Composite Index but trail the Hang Seng Index year-to-date. CSI 300 gained 9.4% in August and 12.7% YTD. Shanghai Composite rose 8.5% in August and 14.1% YTD. The Hang Seng leads, up 24.8% YTD, well ahead of the Nasdaq’s 11.8%
Trade developments and Beijing’s next stimulus measures remain crucial to market momentum. An escalation in US-China trade tensions and delays in fresh stimulus could unravel the bullish sentiment.
