A couple of thoughts about the Trump announcements. First, the changing of the Hong Kong status is simply a recognition of reality. Second, China cannot however both claim that it is bringing Hong Kong law in line with the Mainland and that Hong Kong maintains uniqueness 1/n https://twitter.com/politico/status/1266450864992067587

Third, I've seen some comments about wanting greater specificity but the primary focus that the President can change are trade policies which will bring Hong Kong trade access into line with China on things like tariffs. Fourth, the President has little to no statutory 2/n

Authority to directly limit capital flows either to or from Hong Kong or China. I would expect that both the President and Congress will be actively either looking at the regulatory or legislative options to target capital flows whether that be inbound into the US for 3/n

capital raising like IPOs and outbound in the form of things like passive such as MSCI who announced a deal with the Hong Kong Exchange this week (read the room geniuses). This is where it gets interesting. Fourth, the trade impact will have some impact for sure but 4/n

Given that most of that trade is drawn from southern China, there will still be significant trade transit Hong Kong even if it results in some reshuffling in various ways. Given the nature of the Hong Kong economy however, relying on financial services, any shift in 5/n

financial flows is likely to have an enormous impact on Hong Kong and China. Nearly 99% of RMB trades are into USD and enormous amount of that goes through Hong Kong. If overseas flows don't start in HK before going into A-shares that will have enormous impact. In short 6/n

Targeting the finances in HK and the CCP is where there is likely to be the major changes. Throw in the pressure this will put on firms to leave for places like Singapore and yes, it could result in major pressures given the HK currency management system. Worth noting that 7/n

Nothing substantive has been announced yet though I would expect further movement in this area via numerous potential channels in the days and weeks ahead. Did I hear a delisting due to PCOAB noncompliance passage? The very clear reality is the Chinese banking system is 8/n

Very ricketty and badly in need of USD. Crimping even in small ways USD availability to China will cause significant pain. Just as the Hong Kong status was changed expect follow up in these other areas. There are two announcements that deserve attention. Pulling out of the 9/n

WHO is not something I would advocate but I understand the decision. Funnily, before Trump started criticizing the WHO people were lambasting the WHO for its response so it is funny to watch people who criticized WHO before not treat it like the patron saint of goodness 10/n

I suspect, though don't know, that there is a lot more we don't know yet about the problems at the WHO. Take Interpol for example. We now know much more about the problems with the Chinese head of Interpol during his time there. I would strongly suspect we will learn in 11/n

weeks, months, and years ahead about problems. We can debate the decision to pull out, but let's not pretend that the WHO is basically not respected at all in anyway for its response to corona. One of the keys here is how that money gets rediverted into other health 12/n

institutions. If there is a move away from deeply problematic institutions towards providing more effective delivery in different ways, this could be a positive. Unfortunately, domestically internationally and nationally, Trump is making the WHO the martyr when they really 13/n

are not. Finally, the announcement (which is drawing a lot of comments from university linked people who have no idea what they are talking about) is limiting visas to Chinese students (and this is THE important part) from military linked universities. Some news stories 14/n

Never even mention the military part (get you $#!+ together people) and just say Chinese students. This is complicated and will only be known how it was applied after the fact. China has a series of military universities, they also have military students attending 15/n

non-military universities, and they also have departments in universities doing a lot of work for the military. If this restriction is applied narrowly, which I strongly suspect it will be, it is going to target students involved with specific organizations not the broad 16/n

Classifications such as any student coming from a wide variety of universities. If it is interpreted in that manner, which it is most likely to be, this is an entirely reasonable change because we actually have pretty good information on which research units within specific 17/n

Universities are the problematic ones. As has been pointed out, US has actually rejected fewer Chinese student visas than before so they appear to be taking a pretty narrow approach but only time will tell how narrowly these visa rules are applied. Done.