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We’ve written plenty about how the unrest rattling Hojng Kong hash shaken up its economy and threatened one of its most important industries – tourism – while millions of savers have seen the values of their homes decline, a trend that could seriously threaten the region’s financial system.

Earlier in the summer, we mapped out how both middle class and wealthy Hong Kongers are looking in several places as potential escape routes if living and working in Hong Kong simply becomes too difficult to sustain.

Malaysia, Taiwan, Singapore – these are some of the places Hong Kongers tired of the unrest and worried about a further crackdown by Beijing are eyeing. But while contingency plans are being drawn up, according to Bloomberg, few Hong Kongers have actually started utilizing their newly-developed ratlines, though that might change after some of the worst violence since the demonstrations started unfolded over the past week.

The heads of UBS, Credit Suisse and Standard Chartered said during interviews at the New Economy Forum in Beijing that Hong Kongers are mostly trying to wait out the violence, as far as they can tell. Goldman Sachs, meanwhile, isn’t seeing any change of behavior among major financial clients, but still “the situation needs to be resolved” soon, said CEO David Solomon.

As we’ve written about, so far, Hong Kong’s tourism is on track to take a 20% dive this year, and the drop has already surpassed the SARS outbreak of 2003 in severity. The economy of the former British colony is taking a beating, with retailers, restaurants and hotels cutting wages or letting staff go for fear of not surviving the downturn.

Many worry that if tensions continue to mount, it could hurt Hong Kong’s financial industry.

“We’ve seen clients open accounts in Singapore, Malaysia and Taiwan, in that order,” said Standard Chartered CEO Bill Winters during and interview with BBG. “But while the accounts were set up, not a lot of money has actually moved. We’re not seeing a crescendo.” Similarly, UBS Chief Sergio Ermotti said the Swiss bank has seen clients “activating contingency plans.”

Even bankers haven’t been able to avoid job losses. Many are now looking abroad for jobs as some have been assaulted by protesters and accidentally mistaken for protesters by police. A Citigroup investment banker was detained by police last week, while a JPM employee was punched outside the company’s main Hong Kong offices last month.

Politics have also become a distraction for all. At Standard Charted the directive is clear, said CEO Bill Winters: “You leave your politics at home because we’re here to work.”

One month after brokerages, prompted by money-losing competitor Robinhood, dropped all transaction fees in hopes of gaining market share – a move which has yet to generate any material new users – this morning Fox Business reported that in a giant move amid discount online brokerages, Charles Schwab would buy TD Ameritrade for $26 billion. Both shares of TD Ameritrade and Schwab were sharply higher on the news, up 18% and 2.4% respectively, with other brokers up as well on the news (ETFC +2.5%, IBKR +2.1%).

TD Ameritrade CEO Tim Hockey, who announced in July that he would leave by the end of February, acknowledged last month that his firm’s decision to adopt zero commissions would prompt speculation about mergers.

“We will take a look at anything that makes financial and strategic sense,” he said in October outlining the company’s plans to make up for lost revenue of as much as $240 million a quarter from the new commission structure. “Scale is important. We have scale. We’re very comfortable with our earnings power now, even in this new environment.”

Last month, Schwab started a revolution in the retail brokerage space, when it announced it would eliminate almost all commissions for online trades, causing rivals E-Trade and Fidelity to follow suit. Eliminating the $4.95 per trade commission will cost Schwab $90 million to $100 million in quarterly revenue, or about 3 percent to 4 percent of its total.

Schwab stock had risen 7.8% this year, while TD Ameritrade has fallen 15.5%, although it appears set to erase losses with today’s move.

TD Ameritrade, which began as First Omaha Securities, was founded by Joe Ricketts in1975. In 1988, it became the first firm to let clients make trades by touch-tone phone, then went public three years later. TD bought Scottrade in a $4 billion cash-and-stock deal in 2016, tying up two major players in the industry.

While the news that Schwab is buying TD Ameritrade will be positive for possible acquisition target E*Trade, it may weigh on some asset managers as the combined company would be able to exert even more pressure on industry fees, according to Vital Knowledge’s Adam Crisafulli.

“The key for this industry is asset aggregation and that’s SCHW’s ultimate goal – it had $3.768t of client assets as of the last quarter and adding AMTD’s $1.3t would take the combined company to >$5t,” he said.

And while E*trade may be considered more of a deal target now, there aren’t many obvious buyers left if SCHW, AMTD combine, Crisafulli said, noting that industry consolidation “isn’t shocking,” and that AMTD was thought to be a potential buyer, perhaps of ETFC.

Equity futures pumped then dumped Thursday morning after China invited the top US trade negotiation team for a new round of talks in Beijing amid the latest warnings that the ”Phase One trade deal’ signing could be delayed until next year, reported the Wall Street Journal citing unnamed sources.

• 21-Nov-2019 05:09:48 AM – CHINA INVITES U.S. TRADE NEGOTIATORS FOR NEW ROUND OF FACE-TO-FACE TALKS -WALL STREET JOURNAL, CITING UNNAMED SOURCES
• 21-Nov-2019 05:11:13 AM – NEW U.S.-CHINA TRADE NEGOTIATIONS COULD TAKE PLACE IN BEIJING BEFORE U.S. THANKSGIVING HOLIDAY NEXT WEEK -WALL STREET JOURNAL

Unnamed sources said Chinese Vice Premier Liu He invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin for a meeting next week (there has been no confirmation on date).

The sources said Lighthizer and Mnuchin wouldn’t make the trip “unless China makes it clear that it would make commitments on intellectual-property protection, forced technology transfers, and agricultural purchases.”

E-Mini S&P 500, E-Mini Nasdaq 100, and E-Mini Russell 2000 pumped on the first headlines, but after further examination — are flat as it seems the WSJ pump isn’t working…

Authored by Vanand Meliksetian via OilPrice.com,

Turkey’s location has always given it a key geostrategic advantage. Its proximity to the Middle East and the Caspian as well as its position on the Black Sea make it an indispensable member of NATO. In recent years, however, Ankara’s diplomatic relations with its Western allies have cooled. Now, the discovery of major energy deposits in the Eastern Mediterranean are adding to tensions.

Cyprus is one of the countries that could benefit significantly from the new-found natural gas wealth. The island nation currently imports all of its energy, but the discovery of gas deposits could improve Cyprus’ energy security while at the same time making it an energy-exporting nation. Nicosia’s fraught relations with its large northern neighbor, however, could hamper the development of its energy sector.

The Turkish invasion of 1974 separated the island between an internationally recognized Cyprus and the Turkish Republic of Northern Cyprus which is only recognized by Turkey. To make matters even more complicated, Nicosia is a member of the EU while Ankara’s membership request is still pending. 

Turkey wants a share of the newfound energy wealth to go to the Turkish inhabitants of the island. Furthermore, Ankara has sent exploratory vessels to Nicosia’s EEZ which has evoked a sharp rebuke from the EU.

Brussels has made its position very clear, stating that Cyprus is an independent nation with widespread international recognition and that Turkey has repeatedly used force to deter energy companies from exploring the island nation’s EEZ.

Last week, the foreign ministers of the EU agreed on economic sanctions over Turkey’s actions in Cyprus’ waters. These include asset freezes and travel bans. Also, technical and material support for drilling activities is prohibited. The recent decision follows a previous round under which arms sales were banned following the country’s invasion of Syria.

But there is only so much the EU can do when it comes to influencing Ankara’s decision making. Turkey is sheltering approximately 3.5 million displaced persons. The EU is providing financial support to Ankara in exchange for preventing the continuation of the refugees’ journey to Europe. President Erdogan has already threatened to flood Europe with the displaced persons who for several years have called Turkey their “home”. According to some Greek officials, Ankara has the capability to immediately “send” 500,000 refugees over into Europe.

More importantly, thousands of detained ISIS fighters are currently in Turkish jails or under the supervision of Turkey-backed Arab fighters in Syria. Ankara is calling on European countries to allow the radicalized citizens to return to their country of origin to face trial there. Domestic political developments in several European countries, however, hamper the processing of “home-grown” Islamic terrorists.

Turkey is aware of its advantage vis-à-vis the EU and it is not shy of exploiting it. Erdogan has remained rebellious in the face of increased economic and political headwinds domestically and abroad. During a state visit to the U.S., Turkey’s president warned the EU that it could send a flood of refugees and detained terrorists across the border.

According to Erdogan:

“Turkey is not one of those countries you have come to know until now. We are a country that sits at the negotiating table with you.”

Ankara’s ascension talks with the EU have been in stalemate for years now and membership is increasingly looking like a fantasy.

It is unclear how Turkey will exploit potential gas discoveries when Western energy companies are not allowed to share technological know-how. Ankara could turn to Russia’s state-owned energy companies who are under Western sanctions themselves and therefore would be willing to make a deal with Ankara. However, Moscow historically has enjoyed good relations with Cyprus due to their shared Orthodox religion. Consequentially, it remains uncertain how Russia will play this geopolitical conundrum.

Realistically, Turkey’s options here are limited. Despite the fraught relations, the country remains a member of NATO and its most important economic partners are Western countries. Therefore, Ankara will most likely choose to deescalate before matters go out-of-hand.