While the markets are fixated on the U.S.-China trade deal, there is another potential economic risk looming that might not be getting the attention it deserves. That is the rising Hong Kong protests, which could upset any chance of a trade deal even happening.
“I think the potential black swan, if there is a black swan right now, is what’s happening in Hong Kong right now,” said famed investor Steve Eisman, who was the subject of the book and film “The Big Short.” “If things escalate even further in Hong Kong, that would have a real impact back on the global economy.”
“That’s actually what I’m worried about the most right now, because every weekend we’ve got this drama where the people of Hong Kong are having protests in the millions and its starting to get very violent,” Eisman added.
The protests, which have been festering since the start of the summer, poses a potential market risk that could translate to a black swan event. In financial sector vernacular, a black swan is a major disruption that could obliterate the markets and economy.
Per a CNBC report, “Hundreds of thousands of protesters have taken to Hong Kong’s streets since early June, due to opposition to a now-suspended extradition law that would have allowed people in the city to be extradited to Mainland China. These protests demonstrate the large discontent the people have for the city’s government. The proposal, which is suspended but not fully withdrawn, mark the people of Hong Kong’s call for full democracy.”
With the markets still reeling from the latest sell-offs due to escalated U.S.-China tensions, the Hong Kong protests could further exacerbate the situation. It will be a black swan event that could be felt all around the globe, according to Eisman.