Daily Brief: The NYSE Backtracks On China, And The Best Could Be Yet To Come

Daily Brief: The NYSE Backtracks On China, And The Best Could Be Yet To Come

about 3 years ago3 mins

The New York Stock Exchange (NYSE) suddenly remembered what a special thing it had with three Chinese telecom giants on Monday, and it backtracked on its plan to delist them altogether.

What does this mean?

It was only last week that the NYSE announced it’d be delisting China Mobile, China Telecom Corp, and China Unicom Hong Kong – three of the 35 companies the US government just banned Americans from investing in. Now, though, the company’s changed its mind. The NYSE didn’t give any specific reason for the U-turn, other than to say it came after “further consultation” with regulators. But there’s been a lot of confusion around what the ban would actually mean for US stock exchanges, so it’s hardly a stretch to think that all the hassle could have something to do with it…

Why should I care?

The bigger picture: Can’t we all just get along?

Investors tracking the NYSE had just started to sell the telecom companies’ shares, but this announcement put a stop to all that: the firms’ stock prices surged after the news broke. The Chinese yuan, meanwhile, jumped versus the US dollar. That’s likely because investors are hoping the NYSE’s reversal could be the first sign of easing US-China tensions, which some analysts think could thaw even more when the new US administration comes into power later this month.

Chinese telecom stocks jump

Zooming out: Bigger fish to fry.

Trade war or no trade war, China’s stocks are flying: the country’s major stock index – fueled by an economic rebound that’s outpaced every other major economy – reached its highest level in 13 years on Tuesday. And while nervous investors might remember the country’s last major stock market collapse in 2015, there’s one big difference this time around: the Chinese stock market is cheaper by one key measure, giving it much more room to keep climbing.

China’s stock market benchmark closes at its highest level since 2008

Keep reading for our next story...

Danish Bank Nordea Now Offers Interest-Free Mortgages

Nordea image

Nordea is practically giving new homes away: the Nordic bank started offering its Danish customers interest-free 20 year mortgages on Tuesday.

What does this mean?

Denmark might be small economically speaking, but it’s a big deal when it comes to interest rates: the country’s rates have been negative since 2012 – longer than anywhere else in the world. That environment has encouraged its banks to slash their mortgage rates to unprecedented levels too, with Jyske Bank launching the world’s first negative rate mortgage two years ago – effectively paying borrowers to take out the loan. And now Nordea has once again decided to offer super-cheap mortgages, while others like Danske Bank – the country’s biggest – signaled they may follow suit.

Denmark interest rate
Denmark's interest rates

Denmark’s not the only country whose mortgage rates are plummeting. With major central banks slashing interest rates to boost their pandemic-hit economies, commercial banks worldwide have been doing much the same thing. Just look at the US: the country’s mortgage rate dropped to 16 record lows in 2020, and it’s now just shy of its lowest level since tracking began.

US mortgage rates have plunged this year

Why should I care?

For you personally: Stay sharp out there.

With coronavirus still wreaking havoc on the world’s economies, central banks aren’t exactly likely to raise interest rates this year. That’s important to know: low rates are good for stocks, spurring on company earnings by lowering borrowing costs. Just be ready for the moment you do catch wind of an interest rate hike: it could have the opposite effect.

Zooming in: Stay safe out there.

Bonds should – at least in theory – be less popular among returns-hungry investors when interest rates are so low. But even though more than a quarter of global bonds are currently offering negative yields, investors are still flocking to them. That might have something to do with just how much value investors put on “safe haven” assets in times like this.

Global supply of bonds with negative yields hits record $18 trillion
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