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Macro-economic insights

Weekly update: week 32

Trade war: In the most recent developments of the trade war between the US and China, Trumps has accused China of manipulating its currency. It dates back to the ’90 that this happened. China, allegedly, as a response to another round of tariffs would have failed to balance its currency causing a devaluation towards the dollar. After these allegations China officially communicated an exchange rate which was stronger. Trump has requested the Fed to do the same however this seems unlikely. China was successful in exporting more in July which as consequence supported its currency. However, in July Chinese producers’ prices fell with 0,3% for the first time in 3 years, consumption prices rose with 2,8% in the same period. This presents a challenge to determine the adequate monetary policy.

  • China slaat hard terug met zwakkere munt – DT (5/8/2019)
  • Chinese overheid laat koers renminbi zakken tot laagste peil sinds 2008 – FD (5/8/2019)
  • Trump dreigt dollar in te zetten tegen Chinese valuta-aanval – FD (5/8/2019)
  • Amerika bestempelt China officieel tot valutamanipulator – FD (6/8/2019)
  • China verrast met hogere export, matige verzwakking munt – FD (8/8/2019)
  • Chinese producentenprijzen dalen, inflatie neemt toe – FD (9/8/2019)

The dispute between South Korea and Japan over events in WW2 have pushed their trading relations to the brink. The Japanese sanctions as a response to S.-Korean political statements are not missing their effect. From various angles the global trade has come under pressure, enlarging the uncertainty.

  • Japans-Koreaans conflict nefast voor Samsung en co – DT (5/8/2019)

The Turkish Central Bank has seen another set reorganisations. President Erdogan keeps replacing neutral economists with people who have their fealty with him. This has strongly eroded the neutral image which is desirable of a central bank.

  • Grote Schoonmaak binnen Turkse Centrale Bank – FD (9/8/2019)

In Europe banks are having difficulties with remaining profitable with these low interest rates. Some banks are charging negative rates on mortgages (Jyske bank, Denmark) and variable interest rates are currently higher then fixed rates as the ECB is preparing for another round of stimulus. The ECB does this to counter the failing growth rates in the EU. Particularly the German industry is suffering. Within the German industry solely the family companies, specialised within a niche are still performing robust. The car industry remains the biggest source of concern. The low interest rates should give more liquidity to the markets which would stimulate the economy bring back growth and inflation. However banks have a very hard time being profitable around these rates and have lower margins with negatives rates. The upside of this monetary policy is that countries can refinance their debt very cheap.

  • Europa ontbeert leiderschap om Trump te stoppen’ – DT (6/8/2019)
  • Deense hypotheekrente twintig jaar lang op nul – FD (7/8/2019)
  • Lage rente begint ABN Amro echt pijn te doen – FD (7/8/2019)
  • Zijn de Duitse verborgen kampioenen bestand tegen wereldwijde tegenwind? – FD (9/8/2019)

The Italian coalition has halted. Lega and the MS5 will no longer rule under the same coalition. Expected is that the M5S will look for a new coalition partner to avoid elections. Markets have responded positive to the news.

  • De stekker gaat uit de Italiaanse frankenstein-coalitie – FD (9/8/2019)

Research Archive

29 September 2019 Research Week 39
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22 September 2019 Research Week 38
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15 September 2019 Research week 37
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8 September 2019 Research week 36
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1 September 2019 Research week 35
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25 August 2019 Research Week 34
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18 August 2019 Research Week 33
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11 August 2019 Research Week 32
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30 July 2019 Research Week 31
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30 July 2019 Research Week 29
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