Joe Biden and Xi Jinping were in San Francisco last week for a critical meeting to improve relations between the world’s two largest economies. What say the banks?
Last week, US President Joe Biden and Chinese President Xi Jinping met at the Asia Pacific Economic Cooperation (APEC) summit in San Francisco.
The meeting lasted for four hours, resulting in several key agreements including the establishment of a direct line between the two leaders; restoration of military communications; combating fentanyl inflows to the US; and dialogue over artificial intelligence. But the news was not all positive for improving relations as Biden held a solo press conference after where he reiterated his view that Xi is a «dictator».
What say the banks?
Easing Political Risk
Global banks have been broadly optimistic about the post-meeting outlook with a potential boost to financial markets.
«[A] thaw in US-China relations following the Biden-Xi meeting should help support short-term sentiment towards Asia ex-Japan equities, where investor positioning is extremely bearish,» said Standard Chartered investment strategist Rajat Bhattacharya in an investment note.
«The capital markets are likely to be relieved that the shutdown in Washington was averted […] and that the meeting between US President Joe Biden and Chinese President Xi Jinping has been positive so far,» added LGT head of research content and publications Alessandro Fezzi.
More Wins for the US?
Still, not all were completely optimistic about the outcome.
«Both sides remain quite rigid in their respective positions, so a thaw remains a distant possibility,» commented UBP Asia senior economist Carlos Casanova in a note.
«Broadly speaking, the outcome was more favorable for the US than China, and this was by design. The deal on curbing the chemicals used in fentanyl production is an important domestic win ahead of presidential elections next year.»
