Last week the Hong Kong protests took centre stage. Hong Kong is another factor in the US-China trade war that has the potential to influence negotiations decisively.
The US Senate last week passed legislation aimed at protecting human rights in Hong Kong. China saw this as the US interfering in their domestic affairs and warned that it will retaliate if the bill is enacted. Trump must still make his final decision, but even if he vetoes it, Congress could still go ahead with it because of the strong support it received in both the House of Representatives and US Senate.
S&P credit decision – South Africa
On Friday evening, Standard & Poor’s (1 of the 3 big credit rating agencies) gave their latest evaluation of South Africa. As expected by most, S&P cut their outlook for South Africa to negative and left their credit rating at BB (2 notches below investment grade). Slow economic growth, increasing debt and a bigger fiscal deficit continue to be the focus areas where rating agencies need to see improvement.
This rating will put more pressure on Moody’s as the next step for S&P could be to cut South Africa deeper into junk. This would effectively force Moody’s hand since the disparity between the rating agencies will become too big.
What to look out for this week
On Wednesday, the US are releasing their Q3 GDP data.
US markets are closed Thursday and Friday for Thanksgiving.