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Macro review for the current week

Macro review for the current week

15 October 2020

Apple innovations and upcoming industry trends

Apple annually presents an updated line of its products. This event is one of the most significant for the company and the industry in recent years. After all, Apple has been setting trends in the global gadget market for the past decade. It’s no secret that many Chinese companies use Apple solutions that are not patented. Therefore, the upcoming conference could be Apple’s “most significant event” in the past few years, according to analysts at Morgan Stanley.

It is expected that the presentation will feature a new iPhone model with 5G technology and an updated design. It is worth noting that so far no country in the world has a large-scale deployment of 5G within the entire country, so this is more likely a groundwork for the future. According to many analysts, it is Apple that will push the market towards fast data transfer via 5G technology.

Also recently it became known that in November we will have another presentation of the company’s products. The main beneficiary of the third presentation will be the first ARM-based Mac, according to insider Mark Gurman. This is a truly revolutionary solution, since this type of processor is installed in mobile phones. Analysts and technology experts argue that the new, more compact type of processor will solve the problem of extreme heating of devices. Also, a new type of processor will help free up additional space inside the laptop case. The company is also expected to introduce full-size on-ear headphones in the AirPods line, the HomePod smart speaker and Apple AirTags for locating things.

So, despite the pandemic that appears to be picking up steam again, Apple is striving to maintain its industry leadership in innovation.

Protectionism policy

It’s no secret that recently the policy of protectionism has become more popular. Basically, this trend is driven by the United States, encouraging American companies to abandon production in Asia in favor of relocating factories to the United States. However, it is no secret that production in Asian countries is often much cheaper than in the local market.

 Because of this, the global economy could lose $ 10 trillion by 2025. This could happen if governments do not abandon trade protectionist measures, including new tariffs and other trade restrictions, according to a joint report by BCG and HSBC for G20 leaders. It is worth noting that with the current global economic downturn, these measures will be particularly hard on the economies of countries.

 To assess the impact of such a policy, analysts compared the following two scenarios. The first implies high freedom of trade governed by established rules, the second – the maximum possible trade restrictions, including an increase in import duties on average around the world, the continuation of the trade war between the United States and China, and the adoption of very few new measures aimed at simplifying international trade procedures.

 The authors also believe that the introduction of technologies that contribute to the development of e-commerce and digital commerce will have a positive impact.

 Thus, for the speedy recovery of the world economy and the economy of each of the countries separately, a complete removal or, at least, a significant mitigation of the existing obstacles to free trade between countries is required.

Bank of Japan plans to test its own currency next year

Digitalization is becoming more and more popular in current economies. Recently, the authorities in the Chinese city of Shenzhen conducted the first distribution of the digital yuan among the population. Other Asian countries have decided to keep up with the PRC.

The Bank of Japan plans to begin testing its digital currency in early 2021 fiscal year, according to the regulator’s website.

At the first stage, the Central Bank plans to check the technical capabilities of the issue, distribution and withdrawal from circulation of digital currency. In the future, the Bank of Japan may launch a pilot project.

Despite the fact that the Central Bank does not plan a full-scale introduction of digital currency, and believes that the amount of cash in the economy will not change in the near future. The regulator noted that “from the point of view of ensuring the stability and efficiency of the payment system and the settlement system as a whole, the bank considers it necessary to properly prepare for a change in circumstances.”

It also notes that “Even without reducing the circulation of cash, if digital currency is needed in terms of enhancing the stability and efficiency of the payment system and the settlement system as a whole, it may become advisable to issue a digital currency to support private payment services.”

New Japanese Prime Minister Yoshihide Suga has declared digitalization one of the priorities of the country’s government.

Thus, Asian countries will be the first to test digital currencies in the real economy, which may be the beginning of a new trend in the money market.

Aravana Capital Management provides clients with profitability even during downturns in global equity and bond markets.

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15 October 2020
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