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Asia as a whole traded sideways this month. Hopes that China and the US would resume talks on their trade conflict initially led the Chinese and Hong Kong stock exchanges to rise, and the Fed’s message of lower interest rates was also a positive signal for Asia. But the wind quickly turned.

The Indian market fell as a result of profit warnings and weaker corporate growth guidance. Banks also warned of a new trend of rising losses on consumer loans, causing even the best-managed privately owned banks to correct.

Protests swelled in Hong Kong against China and the local Hong Kong government, related to proposed new legislation allowing extradition of criminals to China. These are the most powerful demonstrations since the 2014 Umbrella Revolution.

It seems unrealistic to believe that China will accept the demands of Hongkongers for full democracy and independence, and there is a danger that China will eventually feel forced into military action. However, Xi Jinping wants to avoid a repeat of Tiananmen Square (4 June 1989) at all costs.

In addition, he is fully occupied in dealing with the trade conflict with the United States. The protests mean that concerns are intensifying about the Hong Kong economy, and real estate companies consequently fell this month.

The drizzle of negative news continued unabated until the end of July. The trade conflict between Japan and South Korea resulted in both countries imposing restrictions and tariffs on selected goods, which is not good for South Korea’s technology sector.

An escalation of the US conflict with Iran led to Iran seizing a British oil tanker, which could push up oil prices and have a negative impact on Asia. Finally, Trump tired of China’s delaying tactics in negotiations and announced that the US intends to impose new 10 percent trade tariffs on imports from China worth USD 300 billion.

China responded by devaluing the yuan and halting imports of US grain. As usual at this time of year there is a perfect storm.