Foxconn's Gou leads world gloom and doom chorus

Top News | Bloomberg and Avery Chen 4 Jun 2019

Foxconn founder Terry Gou Tai-ming warns a sharp change in the global economy in the near future will see a financial upheaval worse than the 2008 financial crisis.

When talking with customers, suppliers in the United States and Japan, economists and financial experts, everyone has a pessimistic view, Gou said.

So he calls on the two largest economies to stop their trade war, adding that the tension it causes not only affects the manufacturing industry, stock and bond markets and corporates but also will damage the consumer economy.

Tao Dong, managing director and vice chairman for Greater China for Credit Suisse Private Banking Asia Pacific, says "the Sino-US trade war will not end in his lifetime" and adds that Hong Kong is sure to be affected greatly.

Hong Kong Trade Development Council chairman Peter Lam Kin-ngok also believes the impact of the trade war can last for years.

As Morgan Stanley sees it, a global recession could start within nine months if US President Donald Trump imposes 25 percent tariffs on an additional US$300 billion (HK$2.34 trillion) of Chinese exports and Beijing retaliates.

And economists at Goldman Sachs expect the United States to impose 10 percent tariffs on the remaining US$300 billion worth of imports from China and on all Mexican goods.

The bank lowered its US second-half growth forecast by about half a percentage point to 2 percent and sees a greater likelihood of interest rate cuts by the Federal Reserve.

A firm caught squarely in the war, Huawei, is meanwhile selling its majority slice of its global submarine cable division, exiting the business of laying undersea piping for the internet soon after the Trump administration blocked it from buying US technology.

Huawei's corporate parent plans to sell its 51 percent of Huawei Marine Networks to Hengtong Optic-Electric, a Jiangsu-based optical-cable manufacturer. Hengtong, whose Shanghai-listed shares have been suspended from trade, has not disclosed the size of the deal.

The company contributed a net profit of 115 million yuan (HK$130.4 million) for Huawei last year.

avery.chen@singtaonewscorp.com

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