BFM: Of Trade and Tech
In this discussion with BFM 89.9, Tony Nash shares views on the latest on trade and tech. How will the US-China trade relations look like under a Biden administration and what is China hoping to accomplish with the recent antitrust regulations on its tech giants? Also, is now a good time to rotate on cyclicals with the successful vaccine trials? And is it possible to have a double-dip recession?
This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/of-trade-and-tech on November 12, 2020.
What will US-China trade relations look like under a Biden administration? What is China hoping to accomplish with the recent antitrust regulations on its tech giants? We speak to Tony Nash, CEO of Complete Intelligence, on these and more.
Produced by: Mike Gong
Presented by: Lyn Mak, Wong Shou Ning
WSN: To help us make sense of this, we have on the line with us Tony Nash, CEO of Complete Intelligence. Biden has not outlined any concrete policy plans for the U.S. China trade relations. But do you think both countries will resolve some of the issues this time around, or will competing interests continue to dominate the narrative?
TN: I think it’s going to be hard. Obviously, the Biden family has deep ties to China, but I think the political environment in the U.S. isn’t really amenable to an easy fix. I know the foreign policy community in the U.S. really wants to just revert back to 2015, 2016, but the voters in the U.S. just won’t let that happen. So whether the administration likes it or not, they’re saddled with much of the positioning that the U.S. has taken over the last few years.
WSN: Now, what about China’s end game, you know, behind the new regulations targeting the tech sector? What are the potential impacts behind those changes, actually?
TN: Well, I think, you know, there’s nervousness both in the U.S. and China over the power of big tech. And I think China is nervous about the information that these tech companies are tracking, about the power they have over markets and behaviors. And I think they’re cracking down. There will be a perception that it will limit things in for Chinese companies in the short term. It certainly hurt the U.S. IPO and other things. But I think there’s a move globally to crack down on big tech. So I wouldn’t be surprised to see moves to crack down on big tech in the U.S. as well. It won’t happen until next year, probably. But there is a move globally and nervousness globally around a power that big tech has.
WSN: Yeah, but, Tony, if you look at the share price of big tech, especially in the U.S., so the likes of Facebook, there has been actually no change to the share price is still continues to do extremely well.
TN: Yeah, absolutely. But that is there are a number of factors that go into that. Part of that is Central Bank activity. Part of that is micro accounts and small investors moving into to these things. Part of that is a perception of things that may or may not happen within the next administration. So we look at Twitter, for example, it’s up 2.8 percent today. But, you know, there’s a lot happening that we believe there will be downside on that going into the end of the year.
So a number of things have changed with the expectation that we’ll have a vaccine relatively soon and that we’ll have continued stimulus and questions around where that stimulus will go. We can look at companies like Palantir, which are up, I don’t know, 60 percent since their IPO six weeks ago. So there are you know, that’s a twenty five billion dollar company now. It’s incredible. So, you know, there are companies like Facebook, Twitter, other companies that that there is a lot of nervousness about in the U.S., Google and so on.
And so I think what the Chinese government is doing and what the U.S. government is doing, although they’ll take different forms, I think they reflect similar concerns.
WSN: And, Tony, you did highlight the vaccine. So do you think now is a good time to rotate into cyclicals like aviation and banking? Is it too early?
TN: I think it’s a bit early. I think we you know, we had expected this stuff to come earlier, but I’m not necessarily we expect there to be a lot of excitement to going into January, but we’re afraid that we might have a false start going into the middle of Q2. So it’s probably a bit early to go in as aggressively as people have gone in. Obviously, it depends on expectations and the terms of their investment in a number of other things. But we would be really patient here. And, you know, we expect things to come a little bit later, although even a small opening is very exciting at this point.
WSN: Yeah, but related to this, Tony, is the fact that Covid-19 cases, especially in the U.S., are increasing every day and it’s the same case in Europe. So I see a new elford, the alphabet being used to describe the economy, a W, which is on the back of a face of a double dip recession. Do you think that’s a possibility?
TN: I think it’s a possibility. But I you know, at least in America, I don’t go to Europe. I haven’t been there for a year. But at least in America, most people aren’t really worried about Covid anymore. They just want to move on. And what people are worried about is hospitalization and death. They’re not actually worried about the virus itself. So the incidence is a bit of in the eyes of, you know, a number of people who I talk to, the incidence of Covid is less concerning than the hospitalizations and deaths. And so the number that people are really keeping an eye on is the hospitalizations and deaths, not necessarily the broad incidence number, which may or may not show may or may not have an impact. It’s really when things get hospitalizations and death. And so the treatment of Covid has taken huge strides in the past six months.
WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on the US economy, whether it’s as a possibility for a double dip recession, which he thinks is highly unlikely because it’s not the number of Covid cases, but unfortunately, the number of deaths and hospitalizations.
LM: Yeah, Tony’s a little also a little bit more cautious when it comes to whether or not it’s time to rotate into cyclicals. Right. Because we have seen a lot of excitement, even as he points out, a lot of excitement going into other stocks as we have seen news of vaccines coming out of Pfizer and an optimism vaccine, optimism has started to creep up again that we might see something by early next year. So he’s of the opinion that it’s going to that the rise in cyclicals is going to come a little bit later. So it means he’s going to hold off for the time being.