Tag Archives: Global markets

U.S.-China dispute casts shadow as world leaders gather in Argentina

U.S. President Donald Trump and Argentina's President Mauricio Macri meet before the G20 leaders summit in Buenos Aires, Argentina November 30, 2018. REUTERS/Kevin Lamarque

By Scott Squires and Daniel Flynn

BUENOS AIRES (Reuters) – The leaders of the world’s top economies gathered in Argentina on Friday for talks overshadowed by a U.S.-China trade war that has roiled global markets, bracing for the kind of geopolitical drama U.S. President Donald Trump often brings to the international stage.

The two-day annual gathering will be a major test for the Group of 20 industrialized nations, whose leaders first met in 2008 to help rescue the global economy from the worst financial crisis in seven decades. With a rise in nationalist sentiment in many countries, the group faces questions over its ability to deal with the latest round of crises.

Overhanging the summit in Buenos Aires, the Argentine capital, is a trade dispute between the United States and China, the world’s two largest economies, which have imposed tariffs on hundreds of billions of dollars of each other’s imports.

All eyes will be on a planned dinner between Trump and Chinese President Xi Jinping on Saturday to see whether they can make progress toward resolving differences threatening the global economy.

Beijing hopes to persuade Trump to abandon plans to hike tariffs on $200 billion of Chinese goods to 25 percent in January, from 10 percent at present.

“We hope the U.S. can show sincerity and meet China halfway, to promote a proposal that both countries can accept,” Foreign Ministry spokesman Geng Shuang told a briefing in Beijing.

Speaking in Buenos Aires, U.S. Trade Representative Robert Lighthizer said he would be surprised if the dinner was not a success, but it would depend entirely on the two presidents.

On the eve of the summit, G20 member nations were still trying to reach agreement on major issues including trade, migration and climate change that in past years have been worked out well in advance.

Trump’s skepticism that global warming is caused by human activity has raised questions about whether the countries will be able to reach enough consensus on climate change to include it in the summit’s final communique.

Earlier this month, officials from countries attending a major Asia-Pacific summit failed to issue a joint statement for the first time after the U.S. delegation clashed with China over trade and security.

However, delegates to the talks in Buenos Aires said good progress had been made on economic sections of the statement overnight. Argentina’s presidency voiced optimism consensus would be reached on a draft.

“As this is a difficult moment for international cooperation, I would like to appeal to the leaders to use this summit … to seriously discuss real issues such as trade wars, the tragic situation in Syria and Yemen and the Russian aggression in Ukraine,” European Council President Donald Tusk told a news conference in Buenos Aires.

Highlighting the deep rifts within the G20, Tusk said the European Union would extend its economic sanctions on Moscow next month, after Russian ships fired on Ukrainian ones in the Sea of Azov last week, seizing the boats and sailors.

Trump cited Russia’s seizure of the ships as the reason he canceled a planned bilateral meeting with Russian President Vladimir Putin, where they had been expected to discuss the U.S. leader’s threat to withdraw from the Cold War-era Intermediate-Range Nuclear Forces treaty.

However, Moscow said U.S. domestic politics may have been the real reason behind the cancellation after Michael Cohen, Trump’s former longtime personal lawyer, pleaded guilty on Thursday to lying to Congress about a proposed Trump Organization skyscraper in Moscow.

The presence of Crown Prince Mohammed bin Salman at the summit also raised an awkward dilemma for leaders. Saudi Arabia’s de facto ruler arrived under swirling controversy over the murder of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul in October.

British Prime Minister Theresa May said she would be robust when she talks to Prince Mohammed, urging him to hold a full and credible investigation into Khashoggi’s killing and hold those responsible to account.

TRUMP AND TRADE

Uncertainty prevailed about how Trump, known for his unpredictability, would behave at what was shaping up as one of the group’s most consequential summits.

Trump rejected a statement by fellow leaders of the G7 industrialized economies at a summit in May after a tense gathering ended in acrimony, again over tariffs and trade.

Before heading for Buenos Aires on Thursday, Trump said he was open to a trade deal with China, but added, “I don’t know that I want to do it.”

Global financial markets will take their lead on Monday from the outcome of the Xi-Trump meeting, having seesawed in recent days on concerns trade tensions could escalate.

Oil markets will also be closely watching a bilateral meeting between Putin and Crown Prince Mohammed on Saturday afternoon for any sign of a breakthrough in a deal for Russia to participate in a production cut by the OPEC oil cartel next month.

In another bilateral meeting on Friday, French President Emmanuel Macron will discuss the Renault-Nissan alliance’s future with Japanese Prime minister Shinzo Abe, seeking to defuse a brewing diplomatic row over the balance of power inside the partnership.

NEW-LOOK NAFTA

One bright spot in Buenos Aires on Friday before the summit opened was the signing of a revised U.S.-Mexico-Canada trade pact to replace the North American Free Trade Agreement.

Signing the agreement alongside Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto, Trump said he looked forward to working with the U.S. Congress to complete the terms of the deal and did not anticipate problems in passing it.

The three countries agreed a deal in principle to govern their trillion dollars of mutual trade after a year and a half of contentious talks concluded with a late-night bargain just an hour before a deadline on Sept. 30.

However, Trudeau took advantage of the signing ceremony to say the partners needed to keep working to lift tariffs on steel and aluminum.

(Reporting by Andreas Rinke in Berlin, Jeff Mason, Roberta Rampton and Makini Brice in Washington; Yawen Chen and Ryan Woo in Beijing and Cassandra Garrison, Daniel Flynn and Pablo Garibian in Buenos Aires; Writing by Matt Spetalnick and Daniel Flynn; Editing by Ross Colvin and Frances Kerry)

Erdogan says Turkey will boycott U.S. electronics, lira steadies

Businessmen holding U.S. dollars stand in front of a currency exchange office in response to the call of Turkish President Tayyip Erdogan on Turks to sell their dollar and euro savings to support the lira, in Ankara, Turkey August 14, 2018. REUTERS/Umit Bektas

By Daren Butler and Behiye Selin Taner

ISTANBUL (Reuters) – President Tayyip Erdogan said on Tuesday that Turkey would boycott electronic products from the United States, retaliating in a row with Washington that helped drive the lira to record lows.

The lira has lost more than 40 percent this year and crashed to an all-time low of 7.24 to the dollar on Monday, hit by worries over Erdogan’s calls for lower borrowing costs and worsening ties with the United States.

The lira’s weakness has rippled through global markets. Its drop of as much as 18 percent on Friday hit European and U.S. stocks as investors fretted about banks’ exposure to Turkey.

On Tuesday the lira recovered some ground, trading at 6.4000 to the dollar at 1751 GMT, up almost eight percent from the previous day’s close and having earlier touched 6.2995.

It was supported by news of a planned conference call in which the finance minister will seek to reassure investors concerned by Erdogan’s influence over the economy and his resistance to interest rate hikes to tackle double-digit inflation.

Erdogan says Turkey is the target of an economic war and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.

“Together with our people, we will stand decisively against the dollar, forex prices, inflation and interest rates. We will protect our economic independence by being tight-knit together,” he told members of his AK Party in a speech.

The United States has imposed sanctions on two Turkish ministers over the trial on terrorism charges of a U.S. evangelical pastor in Turkey, and last week Washington raised tariffs on Turkish metal exports.

It was unclear whether Erdogan’s call was widely heeded, but a Turkish news agency said traders in Istanbul’s historic Eminonu district converted $100,000 into lira on Tuesday.

Chanting “Damn America”, they unfurled a banner saying “we will win the economic war”, the Demiroren agency said. Amid calls to “burn” the dollars, the group headed to a bank branch where they converted the money, it said.

Erdogan also said Turkey was boycotting U.S. electronic products. “If they have iPhones, there is Samsung on the other side, and we have our own Vestel here,” he said, referring to the Turkish electronics company, whose shares rose 5 percent.

His call met a mixed response on Istanbul streets.

“We supported him with our lives on July 15,” shopkeeper Arif Simsek said, referring to a failed 2016 military coup. “And now we will support him with our goods. We will support him until the end.”

But shopkeeper Umit Yilmaz scoffed. “I have a 16-year-old daughter. See if you can take her iPhone away … All these people are supposed to not buy iPhones now? This can’t be.”

INVESTMENT INCENTIVES

Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.

“If we postpone our investments, if we convert our currency to foreign exchange because there’s danger, then we will have given into the enemy,” he said.

Although the lira gained some respite on Tuesday, investors say measures taken by the Central Bank on Monday to ensure liquidity failed to address the root cause of lira weakness.

“What you want to see is tight monetary policy, a tight fiscal policy and a recognition that there might be some short-term economic pain — but without it there’s just no credibility of promises to restabilize things,” said Craig Botham, Emerging Markets Economist at Schroders.

Dollar-denominated bonds issued by selected Turkish banks continued to fall on Tuesday, although sovereign bonds steadied.

Relations between NATO allies Turkey and the United States are at a low point, hurt by a series of issues from diverging interests in Syria, Ankara’s plan to buy Russian defense systems and the detention of pastor Andrew Brunson.

U.S. national security adviser John Bolton on Monday met Turkey’s ambassador to the United States to discuss Brunson’s detention. Following the meeting, U.S. officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries’ leaders.

Ankara has repeatedly said the case was up to the courts and a Turkish judge moved Brunson from jail to house arrest in July. Infuriated by the move, Trump placed sanctions on two Turkish ministers and doubled tariffs on metal imports, adding to the lira’s slide.

Brunson’s lawyer said on Tuesday he had launched a fresh appeal to a Turkish court for the pastor’s release.

(Additional reporting by Ece Toksabay and Ezgi Erkoyun, Writing by Humeyra Pamuk and Dominic Evans, Editing by William Maclean and Jon Boyle)

Korean leaders aim for end of war, ‘complete denuclearization’ after historic summit

By Christine Kim and Josh Smith

SEOUL (Reuters) – The leaders of North and South Korea embraced on Friday after pledging to work for the “complete denuclearization of the Korean peninsula”, on a day of smiles and handshakes at the first inter-Korean summit in more than a decade.

The two Koreas announced they would work with the United States and China this year to declare an official end to the 1950s Korean War and seek an agreement on “permanent” and “solid” peace.

The declaration included promises to pursue phased arms reduction, cease hostile acts, transform their fortified border into a peace zone and seek multilateral talks with other countries including the United States.

“The two leaders declare before our people of 80 million and the entire world there will be no more war on the Korean peninsula and a new age of peace has begun,” the two sides.

South Korean President Moon Jae-in agreed to visit the North Korean capital of Pyongyang this year, they said.

Earlier, North Korea’s Kim Jong Un became the first North Korean leader since the 1950-53 Korean War to set foot in South Korea after shaking hands with his counterpart over a concrete curb marking the border in the heavily fortified demilitarized zone.

Scenes of Moon and Kim joking and walking together marked a striking contrast to last year’s barrage of North Korean missile tests and its largest ever nuclear test that led to sweeping international sanctions and fears of war.

Their meeting comes weeks before Kim is due to meet U.S. President Donald Trump in what would be the first ever meeting between sitting leaders of the two countries.

Trump welcomed the Korean talks.

“After a furious year of missile launches and Nuclear testing, a historic meeting between North and South Korea is now taking place. Good things are happening, but only time will tell!” he said on Twitter.

He later added: “KOREAN WAR TO END! The United States, and all of its GREAT people, should be very proud of what is now taking place in Korea!”

China, North Korea’s main ally, welcomed the leaders’ statement and said it was willing to keep playing a proactive role in promoting political solutions. China is wary of being sidelined by a thaw between the two Koreas and by the upcoming summit between Trump and Kim.

Russia said it was ready to facilitate cooperation between North and South Korea, including in the fields of railway transport and energy.

Japanese Prime Minister Shinzo Abe also welcomed the summit and said he expected North Korea to take concrete steps to carry out its promises.

Global markets were lifted by hopes the summit would pave the way for the end of conflict on the Korean peninsula. Shares in Seoul briefly rose more than 1 percent to a one-month high and Japan’s Nikkei share average also gained.

‘BALL IN U.S. COURT’

As part of efforts to reduce tension, the two sides agreed to open a liaison office, stop propaganda broadcasts and leaflet drops along the border and allow Korean families divided by the border to meet.

Days before the summit, Kim said North Korea would suspend nuclear and long-range missile tests and dismantle its only known nuclear test site.

But there has been widespread scepticism about whether Kim is ready to abandon the nuclear arsenal his country has developed for decades, justifying it as a necessary deterrent against U.S. invasion.

“Everything will not be resolved in the blink of an eye,” said Kim Young-hee, a North Korean defector-turned-economist at the Korea Development Bank.

“Kim Jong Un has put the ball in the U.S. court. He declared denuclearization, and promised to halt nuclear tests,” she said. “That tells us he wants the United States to guarantee the safety of his regime … in return for denuclearization.”

It is not the first time leaders of North and South Korea have declared hopes for peace. Two earlier summits, in Pyongyang in 2000 and 2007, failed to halt the North’s weapons program or improve relations in a lasting way.

“We will make efforts to create good results by communicating closely, in order to make sure our agreement signed today before the entire world, will not end as just a beginning like previous agreements before today,” Kim said after the agreement was signed.

FIRST ACROSS THE LINE

Earlier, Moon greeted Kim at the military demarcation line where the men smiled and shook hands.

In an unplanned move, Kim invited Moon to step briefly across into North Korea, before the two leaders crossed back into South Korea holding hands.

“I was excited to meet at this historic place and it is really moving that you came all the way to the demarcation line to greet me in person,” Kim said, wearing his customary black Mao suit.

“A new history starts now. An age of peace, from the starting point of history,” Kim wrote in Korean in a guest book in the South’s Peace House before talks began.

During a private meeting in the morning, Kim told Moon he came to the summit to end the history of conflict and joked he was sorry for waking Moon up with his early morning missile tests, a senior presidential official said.

Moon and Kim released their joint declaration before a dinner banquet.

Later, with their wives, they watched a music performance and held hands as they watched a montage of photos from their summit set to a K-pop song that included the words “be a family again”.

After warm farewells, Kim was driven back to North Korea.

The United States said earlier it was hopeful talks on peace and prosperity would make progress and it looked forward to discussions with South Korea in preparation for the planned meeting of Trump and Kim in coming weeks.

Just months ago, Trump and Kim were trading threats and insults as the North made rapid advances in pursuit of nuclear-armed missiles capable of hitting the United States.

The United States stations 28,500 troops in South Korea as a legacy of the Korean War, which ended in a truce, not a peace treaty. The war pitted the South, U.N. and U.S. forces against the communist North, backed by China and Russia.

Kim and Trump are expected to meet in late May or June. Trump said on Thursday he was considering several dates and venues.

(Reporting by the Inter-Korean Summit Press Corps, Christine Kim and Josh Smith; Additional reporting by Hyonhee Shin in SEOUL and David Brunnstrom and Susan Heavey and Eric Beech in WASHINGTON; Editing by Lincoln Feast, Robert Birsel)