(ATF) Microsoft founder Bill Gates, whose foundation has spent US$350 million on combating the Covid-19 pandemic, told an American TV audience on Sunday that the US government’s mishandling of the pandemic, in particular, testing was “mind-blowing”.
“You’re paying billions of dollars … to get the most worthless test results of any country in the world,” Gates said on CNN. “No other country has this testing insanity.”
That’s one part of the [US President] Trump story.
Another is his determination to distract to whatever extent possible from this failure to provide leadership in coping with the coronavirus crisis and its economic consequences by blaming China for the “China virus” pandemic and instructing his lieutenants, from Secretary of State Pompeo and Justice Secretary Barr to Health Secretary Azar, to stoke a no-holds-barred anti-China campaign.
A desperate Mr Trump apparently is convinced that tough anti-China rhetoric, economic sanctions, investment bans, shutting down of social media apps and so on with allow him to make up ground in a losing presidential election campaign.
Well, it’s not working. The latest betting odds (see RealClear Politics) have Democrat Biden ahead 58.9 to 39.0.
Meanwhile, the Chinese economy is pulling further ahead of the US on the economic recovery path. China’s exports in July were up a surprising 7.2% year-on-year in US dollar terms. Currency reserves grew by US$42.1 billion. Factory gate deflation eased from 3% in June to 2.4% in July, gradually removing the ill effect of deflation on investment.
The relative performance of the Chinese vs. the US economy continues to be reflected in the currency exchange rate.
The PBoC set central parity of the yuan against the dollar at 6.9649 on Monday morning. At 6pm HK time CNY was trading at 6.9691, maintaining its strength in our forecast range of 6.95 – 7.00.
Gold is trading at $2,039.60, up $11.60 (+0.57%) on the trading day.
The dollar index (DXY) moved in a narrow range of 93.2960 to 93.4350.
The valiant Trump attack on Chinese apps TikTok and WeChat on Friday and again today scared Hong Kong investors away from WeChat parent Tencent Holdings and several other Chinese technology stocks. Tencent is down almost 10% over two days.
Bottom line: For investors who saw the Tencent stock climb relentlessly over the past two months, Mr Trump has opened up a rare investment opportunity.
The fact that the yuan has proved rock solid since late May and has further upside, which the PBoC will have no reason to counteract given the easing of deflation, will give foreign investors in Chinese stocks with mainly domestic exposure the confidence that their investment will not be undermined by currency risk.
