Rising Geopolitical Tensions
Naeem Aslam | Dec 07, 2021 01:06AM ET
Investors should be aware that relationship between the United States and China, the world's two largest economies, has been rocky in recent years, and any significant feud between the two could be detrimental to stock markets.
Washington recently announced that it would boycott the Winter Olympics in Beijing. Washington claims that the boycott is a means of protesting Beijing's alleged violations of human rights. According to Speaker Nancy Pelosi, the move is intended to reprimand China for its actions against Muslims in Uyghur.
Similarly, relations between the United States and Russia have also taken a turn for the worse as the United States and European countries are considering implementing sanctions against Russia if it takes over Ukraine. Washington will likely target large banks in Russia and block Russia’s ability to convert its legal tender, rubles, into U.S. dollars and other major currencies.
h2 Asian Pacific Markets/h2Because of the slowdown in economic growth in China, policymakers are in view of pumping liquidity into markets by supporting the country's real estate market, which has taken a significant hit because of the Evergrande (OTC:EGRNY) debacle. Beijing is now considering easing restrictions on its property sector to fuel economic growth in 2022. Similarly, the People’s Bank of China will also reduce its minimum reserve requirement for banks by 0.5%, which is potentially going to inject $188 billion into the economy.
As of 12.18 a.m. EST, the Nikkei jumped 1.99% and the Shanghai Composite rose 0.12%. The Hang Seng, in Hong Kong, hopped 1.46%. The ASX 200 index soared 1.02%, and the Seoul KOSPI climbed 0.50%.
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