Delisting threat just a feint in Trump's impeachment fight

Business | Ivan Tong 30 Sep 2019

Two developments in the United States got the world talking over the weekend.

One was California Democrat and Speaker of the House Nancy Pelosi announcing a formal inquiry into the impeachment of US President Donald Trump.

The other was a Bloomberg report that the White House is weighing ways to limit the flow of American money into China, including delisting Chinese firms from US stock exchanges.

The two pieces of news - one real and the other one citing sources - might be related but investors must know how to distinguish fact from fiction.

US stocks slumped about 200 points on Friday on the news that Trump's administration had launched a new attack targeting US-listed Chinese firms, with shares of Alibaba, JD.com and Baidu tumbling.

However, once investors calm down, they should understand that this is a typical intimidatory tactic from Trump.

The chances of the US implementing such curbs are close to zero because it totally breaches the principles of a free economy and is even worse than a third-world model.

If the US did this, it would be cutting off its nose to spite its face, and it's easier said than done.

The most likely reason is that Trump leaked out the news to intimidate China ahead of next month's trade talks. Or, he could be just trying to distract the public's attention from the impeachment furore.

US Treasury spokeswoman Monica Crowley clarified that the government does not have any plan to stop Chinese companies from listing on US exchanges and this seemed to cool things down a bit.

While this might have been a typical Trump feint, the impeachment investigation is very real and damaging to the president.

A veteran politician who has fought many battles, Pelosi sat tight for a long time, although there has been widespread discontent over Trump's administration within the Democrats.

She did not launch an impeachment inquiry even when Special Counsel Robert Mueller's Trump-Russia investigation ended, until last week.

Pelosi is not benevolent; she was just fishing, waiting for the right time to reel her catch in.

This time, she's acted on a complaint from a secret whistleblower who said that Trump asked Ukraine President Volodymyr Zelensky, during a phone call in July, to "look into" Democratic presidential hopeful Joe Biden and his son Hunter, with the aim of boosting his re-election prospects next year.

We still don't know the details of the phone call and which parts could trip up Trump.

But since Pelosi finally decided to act, I think she must have a shot.

Even if Pelosi does not achieve her goal and oust Trump with her first arrow, she could slowly torture him in the run-up to the November election.

Impeachment proceedings will be in full swing between early and mid-2020 and this may be why Pelosi is in no hurry.

The whistleblower is said to be a White House official but just a second, third or even fourth source as "Deep Throat" is someone else.

As soon as the news broke, a jittery Trump immediately tried to track down the whistleblower. He even said whoever provided information about the Ukraine call to the whistleblower was "close to a spy" while using words such as "treason."

History has shown us it's not easy to impeach a US President, because it has to be passed by the two chambers. At present, the Democratic Party dominates the House of Representatives while the Senate is controlled by the Republicans.

In the past, Republicans have supported Trump even when they did not agree with him.

But if the impeachment inquiry goes to vote, most Republican senators would find it very difficult to vote for impeachment as that would be political suicide.

The impeachment could also have an impact on the Sino-US trade war.

Some say Trump will now get tougher on Beijing as he uses trade as a red herring, and it will be more difficult to get his administration to budge, reducing the chances of a deal before the elections.

Others, however, say that because of the impeachment headwinds, there will be more incentive for Trump to cut a deal.

Despite his tough posturing, a deal would help Trump consolidate or win the support of voters.

Trump knows how to weigh the pros and cons, so we can't rule out the possibility of a full or partial trade deal by the year-end.

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