As temperatures soar around the world, US Climate Envoy John Kerry arrives in China today for three days of talks to try to get the world’s top two greenhouse gas emitters to collaborate in the fight against global warming. Also heating up this week is a glowing earnings season, while China’s mountain of debt and hot GDP figures may need to be tempered with a little cold analysis.
The big debt. China’s $9 trillion of local government bonds helped drag the world out of the 2008 financial crisis. This time they could be a global liability.
The big data. The People’s Bank of China may hold fire on its one-year rate on Monday after a cut in June, despite the clamor for more stimulus. Still, second-quarter GDP and June activity data the same day will need close scrutiny to discern just how fragile China’s recovery is. Shanghai’s lockdown in 2022 means year-on-year comparisons will be distorted. Strip out the anomalies and the underlying trend is likely to be weak. Elsewhere in the region, look for slower inflation in New Zealand and a pullback in June employment in Australia after May’s surge.
The big drill. China and Russia conducted a record six joint military exercises together last year, five of them after Vladimir Putin’s invasion of Ukraine. And Russian warships are headed for another one near Japan.
The big IPO. One group that hasn’t been put off investing in China are oil-rich monarchies in the Persian Gulf, that are steadily building economic ties beyond crude oil. One deal that could benefit? Seed giant Syngenta’s planned $9 billion IPO.
The big results. Earnings get into full swing this week with tech companies in the spotlight amid an escalating chip war between the US and China. Taiwanese semiconductor bellwether TSMC could get a boost from orders for AI chips, while Indian software exporter Infosys may suffer from a pullback in US financial services.
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The big flea. Lionel Messi finalized his deal to join Inter Miami and could play his first game this week against Mexican side Cruz Azul. The soccer legend could make as much as $150 million over 2 1/2 years, plus a stake in the club and revenue-sharing, after turning down a reported $400 million-a-year deal at Saudi Arabian club Al-Hilal.
The big delay. Also on Monday, crisis-hit Chinese property firm Evergrande is expected to finally approve its 2021 and 2022 annual results. It’s working on an offshore debt restructuring proposal, while its onshore unit has more than $30 billion of overdue commercial bills.
The big recovery. In the US, earnings season is adding to the soft landing narrative. Equity strategists are boosting profit forecasts for the S&P 500 Index over the coming year faster than they are marking them down.
And finally, after unseeded Markéta Vondroušová made history yesterday in the women’s final, Wimbledon has its dream men’s championship match today with world No. 1 Carlos Alcaraz playing record-seeking Novak Djokovic.
Have a legendary week.
