Macau | City can face any market fluctuations caused by US-China trade war - Gov't

The Monetary Authority of Macau said today that the city has the financial capacity to face recent market fluctuations caused by the US-China trade war and an increase in US treasury bonds, but advised investors that the financial markets' "volatility" could "persist and increase"

Macau (MNA) – The Monetary Authority of Macau (AMCM) said on Friday that the Macau SAR government has the “ability” to face market fluctuations caused by the trade war between the United States and Mainland China.

“Market worries about trade tensions between China and the US and rising yields of US treasury bonds affected investor sentiment, causing the three major indexes of the US stock market to fall significantly,” the AMCM indicated.

In recent days, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all suffered a fall in points and share value, with the fall leading to a drop in Asia-Pacific trading markets. This followed a spike in US bond yields that caused concerns to the country’s bond investors.

The drop follows a decision in September by the Trump administration to impose tariffs on US$200 billion worth of Chinese goods, with China responding with duties on US$60 billion in US products.

“The Macau SAR Government is closely monitoring developments in global financial markets in order to uphold the stability of Macau’s economy and its financial system, while urging investors to pay close attention to market developments, remain vigilant, and control risks,” the local monetary authority indicated.

Authorities underscored that the city has “strong fiscal strength, good external financial position, a reliable linked exchange rate system, and a sound financial system” to cope with fluctuations in the financial markets.

“Macau is a small open economy, unavoidably affected by external factors. Nevertheless, persistent economic growth, abundant foreign exchange reserves, prudent fiscal management, and credible linked exchange rate system reflect Macau’s strong economic fundamentals and ability to withstand external risks,” it was indicated.

The AMCM also noted that the city’s Fiscal Reserve has a balanced allocation of diversified assets, which helps to diversify investment risks and with the overall investment portfolio is able to withstand a certain degree of market volatility.

Nevertheless, authorities advised the public that the volatility of the financial markets may “persist and increase,” and that investors should remain vigilant and assess carefully their risk exposure.