Market Talk – Tuesday, May 26

ASIA:

An internal Chinese report warns that China is facing a rising wake of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into a confrontation, people familiar with the matter told Reuters. State media reports say that Chinese President Xi Jinping on Tuesday directed China’s armed forces to strengthen the training of troops and to be ready in case a war-like situation arises. Xi also said that it was important to “comprehensively strengthen the training of troops and prepare for war” to safeguard the national sovereignty and the strategic stability of the country.

Russia became the top crude oil supplier to China last month, overtaking Saudi Arabia with an average of 1.75 million bpd versus 1.26 million bpd for Saudi Arabia, Reuters has reported, citing customs data. In fact, last month Saudi Arabia fell to the third spot among Chinese oil suppliers, with Iraq taking number-two.

India is looking at storing some low-priced US oil in facilities there as its local storage is full, oil minister Dharmendra Pradhan told CNBC TV18 news channel. Pradhan said India, which is the world’s third-biggest oil consumer and importer, had already filled its 5.33 million tonnes of strategic storage and parked about 8.5-9 million tonnes of oil on ships in different parts of the world, primarily in the Gulf. Oil prices have dropped more than 40% so far in 2020 but have picked up in the past few weeks partly due to efforts by the Organization of the Petroleum Exporting Countries and allies to reduce supply.

India’s Finance Ministry has ruled out GST waiver or deference to businesses as part of the economic relief package to help them cope with the situation arising in the wake of COVID-19 pandemic and the resultant nationwide lockdown. In discussions within the ministry, it has been said that Goods and Sales Tax (GST) exemption or deferral is not required as it would not give any benefit to the industry, but seriously impact the revenues of both the states and the center.

The Japanese government is looking to revive the tourism industry, a key driver of the economy that has been battered by the novel coronavirus pandemic, by paying for people to go on vacation in the country. Under its Go To Travel initiative, the government will provide subsidies worth up to 20,000 yen ($185) per day for people going on leisure trips. Prime Minister Shinzo Abe announced on Monday that the state of emergency declared over the coronavirus crisis is over in Japan, ending curbs on economic activity in Tokyo and four other prefectures as experts judged the spread of infections is now under control.

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