Semester 2 Week 9

Hey Legend!

Hope you’re going well, welcome to week 9 💚

Make sure to relax 🛌 and recharge ⚡during the mid-sem break, we’re in the final stretches of this semester — keep going strong soldier 💪!

Thank you 🙏 to everyone who came by our coffee catchup ☕last Friday, we really enjoyed meeting you all 🤝 — due to popular demand, this will be a recurring event throughout next semester 🥳 (YAY! more FREE coffees on us).

Keep an eye on our socials 👀 for our keynote event 👑 this semester in week 11 it is not one to be missed.

The Numbers

The Roundup

India has seen a strong week with advances in new technology and manufacturing growth. 💪 Conversely, we explore a struggling China, 😭 with deflation at the forefront of their problems. Finally, this week’s hot topic 🔥explores the economic implications of a Trump presidency. Let’s dive right in!

India

India and Japan are shaking up the tech world 🤖, with exciting advancements in STEM. India’s manufacturing 🚀 and digital payments 💳 are on fire, and the country is making waves in defense tech 🏛️ and climate monitoring with a new satellite 🛰️.

• India and Japan have enhanced their STEM programs 🧑‍🔬, focusing on robotics 🤖, AI, and sustainable technologies 🌱. This partnership will boost research and innovation in universities across both nations.

• India’s manufacturing sector grew by 7% 📈, driven by the electric vehicle 🚗 and solar energy 🌞 industries. With new export incentives, India aims to generate $25 billion in revenues by 2025.

• India’s digital payments market is projected to hit $1 trillion 💳 by 2025, thanks to the growing use of fintech 🏦 and smartphones 📱, along with innovations like Buy Now, Pay Later services.

• India deepens defence ties with Israel, co-developing drone systems and missile technologies 🚀 while launching a satellite 🛰️ for climate monitoring.

China

This week, fears of a Chinese deflationary spiral are growing world wide 💲🔻🌀, with the latest news on declining house prices 🏘️ 📉 only making things worse, while PwC has been banned from operating in China 🚫🕵️ for fraudulent behaviour. On a more positive note, latest sales figures show EV’s and hybrid vehicles are rapidly growing in popularity in both the domestic and export markets.

• New home prices in China have fallen by 5.3% from August 2023🏠📉📉, the greatest YoY fall in house prices since May 2015. In the last month alone house prices fell by 0.7%, with an equivalent decline occurring in July as well. This latest data is bad news 👎 for Beijing, who have been trying to spur greater demand across the economy, and could very well lead to more cuts in interest rates 🏦 as early as this month.

• Fears of a Chinese deflationary spiral are growing across the world 😨🌎🌀, with China’s core inflation at only 0.3% from a year ago, largely attributed to the collapse of the housing market 💥🏘️ 📉which has pulled the handbrake on the rest of the economy. Instead of addressing this concern by directly providing consumption stimulus to households💵🙋‍♂️🙋‍♀️, China has opted to support their manufacturing sector 🏭, which while growing the economy, has created further downward pressure on prices🏷️⬇️, not resolving the issue at hand.

• Beijing has banned 🚫 Big Four professional services firm PwC 🏢from operating in China for 6 months and instated a 441 million yuan ($92.7 million AUD) fine💰👨‍⚖️due to their failure to appropriately audit failed property developing giant, China Evergrande Group. This punishment is justified by investigations 🕵️🔎that found PwC had “covered up and even condoned financial fraud”.

• Sale of EV’s and hybrid cars in China have risen 43% since August 2023 🚙🔋📈, to a total of 1.03 million units in August 2024, comprising 53.9% of all passenger-vehicle sales in China. This sharp rise occurred despite an overall decrease in car sales by 1% in August 2024 compared to this time last year. Sales are anticipated to grow in the coming into the peak season during the Chinese Autumn and Winter periods.

Hot Topic 🔥

Just as investor confidence in emerging markets began to strengthen following the Fed’s early September rate cuts, the potential of Trump’s return to the White House has stumped this optimism.

Investors fear that a second Trump presidency could unsettle international trade dynamics, potentially triggering a surge in inflation and interest rates. Should this scenario unfold, the U.S. dollar would likely strengthen, putting downward pressure on emerging markets and driving investors away.

Emerging markets typically thrive under conditions of resilient growth in the global economy, falling inflation, and a weaker U.S. dollar. In such a climate, they become attractive destinations for capital. However, the current landscape presents significant challenges: China's ongoing economic struggles are dragging down the global economy, while threats of higher tariffs and trade disruptions loom large, adding further strain to the already fragile recovery of international trade.

Trump has suggested imposing a staggering 60% tariff on Chinese exports - an aggressive move that Barclays economists estimate could slash 2% points off China's GDP within the first year. This would be a serious blow to the world's second-largest economy, with ripple effects likely to be felt across the globe. Even for other U.S. trading partners, Trump has proposed a 10% universal tariff, which while lower, would still represent a substantial economic shift. According to Oxford Economics, such measures could impede U.S.-China bilateral trade, reducing it by as much as 70%, leading to hundreds of billions of dollars in trade being redirected.

In a recent debate, Democratic candidate Kamala Harris claimed Trump's tariff policy as analogous to a regressive sales tax on the middle-class, highlighting concerns that these tariffs could push up consumer prices, disproportionately affecting everyday Americans by raising the cost of living.

Amidst this political heat, there may be potential benefit for emerging markets. If Trump’s proposed tariffs come to pass, China’s role in global supply chains could diminish, potentially opening up opportunities for other economies. India, along with fast-developing Southeast Asian countries including Indonesia and Malaysia, could attain gains from global manufacturers seeking to diversify their supply chains. This diversification could inject fresh momentum into these emerging markets, offering them a path to growth even in a turbulent political climate.

We’ll see you once uni resumes in week 10 👋

Best regards,

EMN 💚