News Analysis 2

Market and Currency Balance

Asian markets appear to be coordinating efforts to grow together between China and South East Asia. In parallel stories, both BBC News World Asia and Asia One Singapore discuss Markets that are working toward integration and global expansion. According to BBC News World Asia, the Hong Kong stock Exchange known as HKEx, closed the day lower by 5% recording a six month low (BBC News World Asia, 2014). The issue stems from the plan for the HKEx to combine with the Shanghai stock market making for one of the regions most anticipated market developments however the plan will now be placed on hold until further notice as it was previously slated for opening later in the month as the Hong Kong Shanghai Market Connect (BBC News World Asia, 2014). It makes sense that the market dropped based on the uncertainty as this tends to be a common reaction by all markets when the future seems to be revealing unknown stability and growth.

The effort to join the two markets will open the borders for multiple brokerage firms anxious to gain access to markets that are normally closed to each other and the rest of the world (BBC News World Asia, 2014). The report further explains that this is the first major step in connecting Chinese markets to the rest of the global financial system (BBC News World Asia, 2014).

Among other trading news AsiaOne Singapore reports that China and Singapore will now begin trading currency between the two nations (AsiaOne Singapore, 2014). These countries want to trade currency with each other in order to reduce the cost of doing business with each other said the report in fact this move between the two markets has been described as a “game changer” because the Yuan was not tradable for over thirty years (AsiaOne Singapore, 2014).

With the news spreading about the markets combining within China as well as news of developing relationships with other Asian Markets through currency trading that was essentially non-existent several decades earlier it is clear that doing business in Asia should have a positive outlook contrary to today’s reports. It would make sense that this period is simply an example of growing pains attributed to the pace at which the markets are growing and the opportunities that are emerging that were never there before.

A deeper look at the reports adds that political pressure to make changes to home governments may cause set-backs in the pace of these coming changes. In Hong Kong, student protesters have built a month long encampment demanding democratic elections of their leaders (BBC News Word Asia, 2014). With these protests the markets have reacted by slowing down. Additionally initiatives to collaborate on environmental programs, exchange programs for government officials as well as education expansion sound like leveling efforts between the governments to counteract negative global perception associated with the civil unrest among students in Hong Kong (AsiaOne Singapore, 2014).

Advisers are likely monitoring media outlets not even mentioned in these reports to direct leaders in making decision about how to proceed with actions between the two countries and markets. From a business perspective perception can make or break the market on any given day.

References

BBC News World Asia (2014). Hong Kong-Shanghai Stock Connect delay hits bourse shares. Retrieved from http://www.bbc.com/news/business-29782593

AsiaOne Singapore (2014). S'pore, China launch direct trading of currencies. Retrieved from
http://news.asiaone.com/news/singapore/spore-china-launch-direct-trading-currencies