Impact Of Hong Kong Extradition Treaty Suspension
The details and possible repercussions are more important than you might think.
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We have a quick question here from Gabriel, asking what type of impact will the most recent announcement have that New Zealand is suspending the extradition treaty with Hong Kong, following the imposition of the national security law.
Now Gabriel, the thing about this release is that New Zealand isn't the first country to do this. We already had Australia as well as Canada, as well as the United Kingdom.
All of them coming up, basically doing the same thing, suspending that extradition treaty with Hong Kong. Now so far, the market reaction has been fairly limited because, it's not a major risk-off deal right now, where it will get interesting though, is if we do see China deciding to take any economic retaliation or any retaliatory steps against these four nations, that'll have a potential impact on the overall risk flows.
Not only are the overall risk flows, but also on each of these individual nations and their currency. Looking at something like New Zealand, for example, if you compare China as the export partner, 24% of their exports goes to China and of that 24%, these are the products in mind.
If China decides to target anything like concentrated milk, butter, any major dairy products or rough wood for example, that can have a major impact on the New Zealand economy and can affect the kiwi dollar.
Looking at something like Australia, a much larger part of their exports goes to China. 35.5% of that, and if China decides to target things like iron or coal petroleum, et cetera, that'll have a major impact on the Australian dollar. Looking at something like Canada and the UK, they are far less exposed in terms of the size of trade.
China only 5% of their exports from Canada, and there's a whole range of products there going to them that can affect them, but it should be rather limited given the size of these exports, going to them. Turning to something like the UK, it gets a little bit more interesting though. Also a small part, less than 5% coming in at fourth spot, 71%, but 21% of that and is cars and 22% of that is crude.
Any one of these exports being targeted by China, or going to China from the UK, that can have an impact on the Pound. Right now I'm not expecting any major impact on these currencies from the suspension of the treaties.
But if we see China starting to target any of these major export products from these nations, that can have a bigger impact for these currencies. And that is something that we can look for, for the potential reactions from the market.
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There’s a link below were you can learn more about it
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----
We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
-----
We have a quick question here from Gabriel, asking what type of impact will the most recent announcement have that New Zealand is suspending the extradition treaty with Hong Kong, following the imposition of the national security law.
Now Gabriel, the thing about this release is that New Zealand isn't the first country to do this. We already had Australia as well as Canada, as well as the United Kingdom.
All of them coming up, basically doing the same thing, suspending that extradition treaty with Hong Kong. Now so far, the market reaction has been fairly limited because, it's not a major risk-off deal right now, where it will get interesting though, is if we do see China deciding to take any economic retaliation or any retaliatory steps against these four nations, that'll have a potential impact on the overall risk flows.
Not only are the overall risk flows, but also on each of these individual nations and their currency. Looking at something like New Zealand, for example, if you compare China as the export partner, 24% of their exports goes to China and of that 24%, these are the products in mind.
If China decides to target anything like concentrated milk, butter, any major dairy products or rough wood for example, that can have a major impact on the New Zealand economy and can affect the kiwi dollar.
Looking at something like Australia, a much larger part of their exports goes to China. 35.5% of that, and if China decides to target things like iron or coal petroleum, et cetera, that'll have a major impact on the Australian dollar. Looking at something like Canada and the UK, they are far less exposed in terms of the size of trade.
China only 5% of their exports from Canada, and there's a whole range of products there going to them that can affect them, but it should be rather limited given the size of these exports, going to them. Turning to something like the UK, it gets a little bit more interesting though. Also a small part, less than 5% coming in at fourth spot, 71%, but 21% of that and is cars and 22% of that is crude.
Any one of these exports being targeted by China, or going to China from the UK, that can have an impact on the Pound. Right now I'm not expecting any major impact on these currencies from the suspension of the treaties.
But if we see China starting to target any of these major export products from these nations, that can have a bigger impact for these currencies. And that is something that we can look for, for the potential reactions from the market.
-----
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
