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U.S. House approves restrictions on Chinese listings. Australia won't give ground to China. And New Zealand's property market is way over-valued.

China Listings

The U.S. House approved legislation that could lead to Chinese companies including behemoths like Alibaba and Baidu getting kicked off U.S. exchanges if Washington regulators aren't allowed to review their financial audits. The legislation easily cleared the Senate in May and won bipartisan support in the House. The bill will now go to President Donald Trump, who is expected to sign it. Meanwhile, China's loosening of control over capital markets is being accompanied by tougher oversight of companies that previously faced little regulation.

Won't Give In

Australia said it won't give ground on a list of Chinese grievances against the government as a growing diplomatic row hurts trade between the two countries. A Chinese diplomat in Canberra last month handed media outlets a document outlining 14 grievances, from Australia meddling in domestic affairs in Hong Kong to calling for a probe into the coronavirus outbreak. Relations have been souring for months, with a string of commodities targeted with tariffs or bans in what Canberra says amounts to "economic coercion." But China's hardening stance is winning fans back at home. And this just in - the House approved legislation that could restrict Chinese firms from listing on U.S. exchanges.

Markets Cautious

Asian stocks looked set for a cautious start Thursday after U.S. equities eked out another record high amid renewed optimism over U.S. stimulus talks and vaccine approval. Treasury yields ticked higher and the dollar touched a more than two-year low. Futures were little changed in Japan and slightly higher in Hong Kong and Australia. The S&P 500 closed at another all-time high, led by gains in energy stocks. 

Nomura Hiring

Nomura is on a hiring spree to bolster its wealth and fixed income businesses in Asia — it hired about 20 to 25 private bankers from rivals including Deutsche Bank and BNP Paribas SA this year, and plans to add similar numbers in each of the next two to three years, said Rig Karkhanis, head of global markets for Asia excluding Japan. It also aims to recruit as many as 40 people for fixed income in the next 18 months, he said. Earlier this year, it said it was hiring M&A bankers in Japan amid a sharp rebound in domestic deal-making.

Red Hot Housing

At a packed auction room in Wellington, New Zealand's capital city, houses are selling for hundreds of thousands of dollars above their government valuations, thanks to ultra-low interest rates. The red-hot market is causing such concern that Prime Minister Jacinda Ardern's government has taken the unusual step of asking the central bank to do something about it, saying surging prices are "harmful to our aims of reduced inequality and poverty." It's a dynamic that's starting to play out in other countries too, as the record-low rates deployed to battle the coronavirus pandemic drive a rush into bricks and mortar.

What We've Been Reading

This is what's caught our eye over the past 24 hours:

And finally, here's what Tracy's interested in today

The below might be one of the most important charts when considering the direction of the world economy and markets next year. It comes courtesy of Bloomberg Opinion columnist and Federal Reserve-watcher Tim Duy, and shows that wages and salaries are growing at a rate very close to their pre-pandemic levels. In other words, despite all the impact of the coronavirus outbreak on the U.S. economy, the average consumer looks to be in a decent position and "V" shapes are now appearing in a host of consumer-related indicators. That raises the prospect of a "super-charged" economy next year, as a successful vaccine combines with confident consumers to power spending and a rebound in services.

Bloomberg

Bloomberg

From there, it's easy to envision a challenging year for both the Fed and, potentially, markets. Stocks have been rising during the recent sell-off in bonds, which suggests most investors are getting ready for a scenario in which a successful vaccine sparks an economic recovery that's accompanied by levels of inflation that are moderate enough to allow the U.S. central bank to keep benchmark interest rates at low levels. But there is a risk that a vaccine turns the temperature on the economy up from "super-charged" to "scorching." That could force the Federal to raise rates, and potentially unsettle markets.

You can follow Tracy Alloway on Twitter at @tracyalloway.

 

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