Biden – Xi meeting: Global markets will be cheered by better ties

By George Prior 

Despite low expectations for “a long list of outcomes,” global markets will welcome US President Joe Biden’s highly anticipated meeting with Chinese President Xi Jinping on Wednesday in the San Francisco Bay Area.

This is the bullish assessment from Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory asset management and fintech organizations.

It comes ahead of the first meeting between the two world leaders in a year – and the first time Xi has been in the US since 2017 – as ties between the superpower rivals are at their most tense point in decades.

Of the meeting a senior Wite House official told reporters: “We’re not talking about a long list of outcomes or deliverables…The goals here really are about managing the competition, preventing the downside risk of conflict and ensuring channels of communication are open.”

Nigel Green comments: “This meeting is mostly about symbolism, rather than deliverables. But this high-stake symbolism is important for global markets.

“Improved diplomatic relations, clearing up misperceptions and circumnavigating surprises between the two economic powerhouses will contribute to enhanced market stability.

“The China-US trade tensions that have characterized recent years have often resulted in market fluctuations and increased uncertainty.”

Investors, sensitive to geopolitical risks, tend to react nervously to trade disputes and political tensions between major economies. “A more amicable relationship can only mitigate these risks, creating an environment where markets operate with greater predictability.”

Furthermore, a positive turn in China-US ties is likely to open new avenues for collaboration and economic partnerships.

“Both countries possess immense economic influence, and their cooperation can drive global economic growth. Increased trade opportunities, reduced tariffs, and a more open economic dialogue will stimulate cross-border investments and facilitate the flow of capital between the two nations,” says the deVere CEO.

This collaborative approach should act as a catalyst for global financial markets, promoting economic interconnectedness and diversification.

The potential for eased trade tensions also bodes well for multinational corporations operating in both China and the United States.

Nigel Green notes: “A more harmonious relationship will translate into a friendlier business environment, with reduced regulatory uncertainties and fewer trade barriers. This, in turn, can positively impact corporate earnings, driving investor confidence and stock market performance on a global scale.”

Moreover, an improved relationship can contribute to the stabilisation of global supply chains. The trade tensions of recent years have prompted companies to reconsider their supply chain strategies, often leading to disruptions and increased costs.

A more cooperative stance between China and the United States would alleviate these concerns, providing a conducive environment for businesses to optimize their supply chains and operate more efficiently. This, in turn, can have a “cascading effect on the financial markets” as companies benefit from improved operational efficiency and cost-effectiveness.

The deVere CEO concludes: “As the world eagerly watches the diplomatic developments unfold between Biden and Xi this week, financial markets will be buoyed from signs of a more cooperative and connected global economic landscape.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of offices across the world, over 80,000 clients and $12bn under advisement.