Stock markets dive after Trump threat on China tariffs

People walk past a bank’s electronic board showing the Hong Kong share index at the Hong Kong Stock Exchange yesterday. (AP Photo)
Updated 06 May 2019

Stock markets dive after Trump threat on China tariffs

  • The Shanghai index plunged more than 5 percent, with the Chinese yuan also taking a battering after the president threw a spanner into the high-level negotiations
  • European equities also dived, with key euro zone exchanges Frankfurt and Paris down by around 2 percent

PARIS/NEW YORK: President Donald Trump sent Asian and European markets plunging Monday after threatening to hike tariffs on $200 billion of Chinese goods at the end of the week in a bid to speed up stuttering trade talks between the economic superpowers.
The Shanghai index plunged more than 5 percent, with the Chinese yuan also taking a battering after the president threw a spanner into the high-level negotiations, which many observers were expecting to wrap up imminently.
“For 10 months, China has been paying Tariffs to the USA of 25 percent on 50 Billion Dollars of High Tech, and 10 percent on 200 Billion Dollars of other goods,” Trump tweeted Sunday night. “The 10 percent will go up to 25 percent on Friday.”
He added: “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
The warning will throw a shadow over the next round of talks ahead of a visit by a Chinese delegation to Washington this week.
European equities also dived, with key euro zone exchanges Frankfurt and Paris down by around 2 percent. London was closed for a public holiday.
However, while a number of news outlets reported that China was considering delaying or canceling the meeting, a foreign ministry spokesman said a delegation would head to the US as planned.
“Trump has taken the proverbial sledgehammer to the walnut this morning and the only two words likely to be on the minds of traders and investors this week are ‘trade talks’,” said OANDA senior market analyst Jeffrey Halley.
Shanghai shares sank 5.6 percent as investors returned for the first time since Tuesday. News that the People’s Bank of China would slash the amount of cash lenders must keep in reserve, to support small businesses, had little impact in the face of Trump’s warning.
Hong Kong tumbled 2.9 percent, Singapore was off 3.1 percent and Taipei shed 1.8 percent, while Sydney dropped 0.8 percent and Wellington was 1 percent down.
“Trade had been put to the side by many market participants,” said Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs.
But Trump’s threat now “raises the specter of a significant hit to growth should these tariffs escalate and should the uncertainty associated with that weigh on investment going forward,” he told Bloomberg TV.
The yuan sank 1.3 percent at one point against the dollar, its heaviest fall in more than three years.
“Investors will remain bearish on the yuan, as they reprice in trade war risks because the new developments are a reversal of previous positive progress,” said Ken Cheung, senior foreign-exchange strategist at Mizuho Bank. “The news was unexpected.”
On oil markets, both main contracts were hammered by worries that a trade war between the world’s top two economies could hit demand.
However, Stephen Innes at SPI Asset Management remained positive.
“We do know the president tends to retreat from more aggressive displays, so I am viewing this thinly veiled threat as political posturing or a tactical decision to apply more pressure on China to put through a trade deal that aligns with the best USA economic interest at heart.
“Despite US-China trade talks hitting an apparent impasse based on (the) tweet, I think a deal will be signed shortly.”
Warren Buffett said on Monday that a trade war between the US and China would be “bad for the whole world.”
His conglomerate Berkshire Hathaway owns or invests in many companies that do business in China, including Apple, in which it has a more than $50 billion stake.
“If we actually have a trade war it will be bad for the whole world,” Buffett said. “With some people in negotiations, the best technique is to act half-crazy.”
A full-scale trade war “would be bad for everything Berkshire owns,” Buffett added, though the probability it might happen is low.
He added that Trump’s threat raises the stakes for Chinese leader Xi Jinping.
“You’re talking about two personalities who are very much used to getting their way in politics, and talking about how they will be perceived in their own country in terms of their behavior,” he said. “It gets very complicated.”


Electric luxury vehicles, SUVs ‘more likely to cause accidents’

Updated 23 August 2019

Electric luxury vehicles, SUVs ‘more likely to cause accidents’

  • As EV sales rise, French insurer AXA warns that drivers are struggling to adapt to cars’ rapid acceleration

LONDON: Electric luxury cars and sport utility vehicles (SUVs) may be 40 percent more likely to cause accidents than their standard engine counterparts, possibly because drivers are still getting used to their quick acceleration, French insurer AXA said.

The numbers, based on initial trends from claims data and not statistically significant, also suggest small and micro electric cars are slightly less likely to cause accidents than their combustion engine counterparts, AXA said at a crash test demonstration on Thursday.

AXA regularly carries out crash tests for vehicles. This year’s tests, which took place at a disused airport, focused on electric cars.

Overall accident rates for electric vehicles are about the same as for regular cars, according to liability insurance claims data for “7,000 year risks” — on 1,000 autos on the road for seven years — said Bettina Zahnd, head of accident research and prevention at AXA Switzerland.

“We saw that in the micro and small-car classes slightly fewer accidents are caused by electric autos. If you look at the luxury and SUV classes, however, we see 40 percent more accidents with electric vehicles,” Zahnd said.

“We, of course, have thought about what causes this and acceleration is certainly a topic.”

Electric cars accelerate not only quickly, but also equally strongly no matter how high the revolutions per minute, which means drivers can find themselves going faster than they intended.

FASTFACT

Accident rates among luxury and SUV electric vehicles are 40 percent higher than for their combustion engine counterparts.

Half of electric car drivers in a survey this year by AXA had to adjust their driving to reflect the new acceleration and braking characteristics.

“Maximum acceleration is available immediately, while it takes a moment for internal combustion engines with even strong horsepower to reach maximum acceleration. That places new demands on drivers,” Zahnd said.

Sales of electric cars are on the rise as charging infrastructure improves and prices come down.

Electric vehicles accounted for less than 1 percent of cars on the road in Switzerland and Germany last year, but made up 1.8 percent of Swiss new car sales, or 6.6 percent including hybrids, AXA said.

Accidents with electric cars are just about as dangerous for people inside as with standard vehicles, AXA said. The cars are subject to the same tests and have the same passive safety features such as airbags and seatbelts.

But another AXA survey showed most people do not know how to react if they come across an electric vehicle crash scene.

While most factors are the same — securing the scene, alerting rescue teams and providing first aid — it said helpers should also try to ensure the electric motor is turned off. This is particularly important because unlike an internal combustion engine the motor makes no noise. In serious crashes, electric autos’ high-voltage power plants automatically shut down, AXA noted, but damaged batteries can catch fire up to 48 hours after a crash, making it more difficult to deal with the aftermath of
an accident.

For one head-on crash test on Thursday, AXA teams removed an electric car’s batteries to reduce the risk of them catching fire, which could create intense heat and toxic fumes.

Zahnd said that studies in Europe had not replicated US findings that silent electric vehicles are as much as two-thirds more likely to cause accidents with pedestrians or cyclists.

She said the jury was still out on how crash data would affect the cost of insuring electric versus standard vehicles, noting this always reflected factors around both driver and car.

“If I look around Switzerland, there are lots of insurers that even give discounts for electric autos because one would like to promote electric cars,” she said.