The US-China trade war escalated further this week. On Monday, China increased its tariffs on US$60 billion worth of American imports to between 20% and 25% from the previously imposed 10%. This was a response to the US increasing tariffs on US$200 billion worth of Chinese imports to between 20 and 25% from 10%.
Unwilling to back down, the US released a list of around US$300 billion worth of Chinese imports that could face a 25% tariff. The complete list would encompass almost all of Chinese imports into the US. Investors reacted to the news, with the S&P 500 falling more than 2% on Monday, 13 May. Economists said that China has a 25.1 trillion yuan unspent budget that they could use to stoke the economy if the trade war really hurts its economy.
Meanwhile, Malaysia’ economic growth slowed in the first quarter to 4.5%, from a 5.7% growth in the previous three months. The increase was, however, higher than the median estimate of 4.3% of economists polled by a Bloomberg survey.
Malaysia’s central bank, which cut interest rates last week, is forecasting growth of 4.3% to 4.8% this year. Prime Minister Mahathir Mohamad also revived billion dollar infrastructure projects that were put on hold in 2018, such as the US$11 billion East Coast Rail Link and the US$34 billion Bandar Malaysia property and transport hub, which could propel stronger growth in the second half of 2019.
Hyflux (SGX: 600) is set to lose Tuaspring Integrated Water and Power Plant after it announced that Maybank, Tuaspring’s only secured creditor, has appointed receivers and managers to take over the property. The news followed the national water agency PUB’s notice to Hyflux that it will terminate the water purchase agreement and take over the Tuasspring desalination plant. Tuaspring cost Hyflux S$1.05 billion in all but has been a drag on earnings since it began operations in March 2016.
Hyflux also clarified that it has received only a draft term sheet from potential white knight, United Arab Emirates utility Utico. In addition, Hyflux is engaged in discussions with Oyster Bay fund on its proposed investment, and the company envisions an investment of up to S$500 million by the fund.
Uber shares continued its free fall this week after it went public for US$45 per piece. Lyft extended its losses to 29% since its March debut. The share slump reflects investor scepticism over the size and eventual profitability of the ride-hailing market.
China reported slower retail sales and industrial output growth in April. Overall retail sales rose 7.2% from a year ago, its slowest pace in 16 years and 1.5 percentage points lower than March’s 8.7% growth. Growth in industrial output was 5.4%, slower than March’s 8.5% growth and below analysts’ estimate of 6.5%.
Finally, a report by Bloomberg showed that China continues to be the front runner in adopting electric vehicles. In the US, there were 300 electric buses last year. Compare that to China, which had 421,000 e-buses, out of the 425,000 worldwide. China’s municipal e-bus fleet is expected to rise to more than 600,000 by 2025. The shift towards e-bus can be significant in our fight against global warming. Bloomberg estimates that 500 barrels of diesel are displaced each day for every 1,000 e-buses on the road.
Worried about the overall state of the market? Do you know the 1 thing you should never do in the stock market? The Motley Fool Singapore’s new e-book lays out a plan to handle market crashes, details the greatest advantage you have as an investor, and looks at decades worth of market data to bring you the smartest insights on investing. You can download the full e-book FREE of charge—Simply click here now to claim your copy
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore writer Jeremy Chia does not own shares in any companies mentioned.