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JUNE 15: Carrie Lam, Hong Kong’s chief executive, speaks during a news conference at Central Government Complex on June 15, 2019 in Hong Kong China.

Anthony Kwan | Getty Images News | Getty Images

Crowds of Hong Kong protesters took to the streets Sunday to demand the city’s top official resign a day after she suspended — but did not withdraw — contentious legislation to allow extraditions to China that opponents say must be scrapped entirely.

Citizens, many dressed in black, packed subway carriages as they made their way to participate in the march beginning in the late afternoon in hot, muggy weather and that followed a similar one last Sunday that drew hundreds of thousands. Crowds also lined up to take ferries across famed Victoria Harbor to join the demonstration.

Immediate estimates were not available but huge throngs similar to the week before were seen packing the main protest route and spilling over into adjacent streets. People held signs including ones demanding Chief Executive Carrie Lam resign and denouncing the extradition proposal and alleged police brutality. “Stop killing us,” read one.

Lam had vowed to press ahead with amendments to Hong Kong law to allow extraditions to places with which it has no such arrangements — including mainland China.

But citing injuries to police and protesters in demonstrations that turned violent Wednesday and what Lam called divisions in society engendered by the plan, she announced Saturday that she was putting the legislation on indefinite hold.

Many in the Asian trade and finance center of 7.4 million people opposed the plan as they fear their legal system and freedoms – legacies of the territory’s history as a British colony – would be compromised by closer judicial ties with China.

Hong Kong was guaranteed a high degree of control over its own affairs for at least 50 years under a “one country, two systems” arrangement when Britain ceded sovereignty to China on July 1, 1997. But local unease over increasing mainland influence has steadily grown since.

Foreign business groups and governments, including the United States, also opposed the extradition plan, stressing concerns that any erosion to Hong Kong’s legal system could make it a less attractive place for banks and companies to operate.

The mood on Sunday was one of anger at Lam but also sorrow after the death of a protester on Saturday after he reportedly fell from the top of a shopping mall where he had unfurled a banner demanding the plan be withdrawn.

Ahead of the protest, hundreds pf people paid their respects at a makeshift memorial set up outside the shopping mall, offering flowers, prayers and incense.

‘Express our voice’

Kelly Wong, who thinks Hong Kong is completely under China’s control, said she felt “angry” at Lam for saying she would listen more to the opinions of citizens but with the aim of eventually passing the bill.

“So I think we should come out and express our voice,” she told CNBC.

Sunday’s demonstration marks a week of anti-government protests that included scenes of violence — especially on Wednesday – that are rare in Hong Kong.

On that day crowds estimated by police at more than 10,000 people surrounded the local legislature to stop debate on the bill.

It was peaceful for most of the day but police later repeatedly fired tear gas and rubber bullets into crowds and some protesters clashed with officers and threw objects at them. Many were angry at the response of law enforcement, though Hong Kong’s police commissioner told reporters that it was appropriate.

Lam had called the scenes an “organized riot,” words that angered many.

“There was no riot,” read a sign carried on Sunday.

The Civil Human Rights Front, the pro-democracy political advocacy group that organized last Sunday’s protest as well as the latest one, called Saturday for the rally to go ahead after Lam’s announcement.

“Postponement is not withdrawal,” the group said on its Facebook page Saturday,.

It said that last Sunday’s protest drew just over a million people, though police put the figure at about 240,000.

— CNBC’s Vivian Kam and Yolande Chee contributed to this report.

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experts predict more pound weakness

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Sterling whipsawed Tuesday as Boris Johnson emerged as the winner of the Conservative Party leadership contest, and will become British Prime Minister as of Wednesday.

The currency initially fell for a third day running during morning trade, plunging a further 0.4% against the dollar to reach a 27-month low. Investor jitters center around concern that Johnson could pull the U.K. out of the European Union without a formal deal in place.

But immediately after Johnson was announced as the country’s next leader, the pound pared its losses to trade around the flatline at $1.2474. Johnson’s rise to power had largely been priced in by the markets and the announcement meant one rung of uncertainty had been removed.

Johnson will deliver his maiden speech as prime minister outside 10 Downing Street on Wednesday. On Tuesday, Johnson struck a compromising tone, promising to “unite the country,” but reiterated calls for optimism on the prospect of the U.K. leaving the bloc.

Michael Brown, a senior analyst at Caxton FX, said his focus would quickly switch to the next steps: “Namely, Cabinet appointments and the Brexit plan. The latter will be of more importance for markets, with sterling set to remain under pressure should Boris continue his ‘do or die’ Halloween Brexit stance.”

Britain’s National Institute of Social and Economic Research (NIESR) published a report on Monday which suggested that there is now a 40% chance of a “no-deal” Brexit on October 31, an event anticipated by many to be profoundly damaging for the British economy.

Johnson has vowed repeatedly to take the U.K. out of the EU with or without a deal in place, while also rejecting the existing Withdrawal Agreement negotiated by his predecessor Theresa May, and pledging to return to Brussels to seek new terms.

In the past week, as 160,000 Conservative Party members cast their ballots to elect the country’s next leader, both Johnson and rival Jeremy Hunt hardened their stance on the Irish backstop clause insisted upon by Brussels, therefore increasing the likelihood of a no-deal departure.

In a recent note, Berenberg senior economist Kallum Pickering raised the risk of a hard Brexit — in which the U.K. exits both the EU’s customs union and its single market to trade on World Trade Organization terms — to 40%, making it Berenberg’s base case.

However, as Pickering pointed out, Johnson has a reputation for adapting his rhetoric to changing tides of political sentiment. A Conservative member of the House of Lords, Michael Heseltine, once described Johnson as “a man who waits to see the way the crowd is running and then dashes in front and says ‘follow me’.”

Speaking to CNBC Monday, Pickering said an unresolved Brexit was like a “kidney stone lodged in the abdomen of the British economy,” and projected greater sterling weakness until a resolution is found.

In a further note Tuesday, Pickering suggested that Johnson’s promise to scrap the Irish backstop from the Withdrawal Agreement may just be a high-risk negotiating strategy, with a low chance of success, to push for compromise from Irish Prime Minister Leo Varadkar to accept a half-way deal. If the EU refuses Johnson’s demand, Pickering predicted, moderate British lawmakers could move to thwart a no-deal exit, setting the stage for a “major showdown in Parliament” in the fall. This could lead to a further Brexit extension, a snap election or a second referendum.

“While Johnson may be forced to take a more pragmatic line eventually, we do not expect him to use soft words on Brexit in his first speech,” Pickering wrote on Tuesday.

“In the not-unlikely event that he doubles-down and appears to harden his Brexit stance further, U.K.-oriented equities and sterling would likely react negatively.”

Boxed into a hard Brexit

Two further developments suggest that the hard Brexit risk has increased. Ahead of his anticipated coronation, Johnson has been surrounding himself with hardliners likely to box him into pursuing the exit door on Halloween come what may. As he begins to name his Cabinet this week, the extent of the euroskeptic makeup of his ministers could further impact the currency.

Meanwhile, the main opposition Labour party is sliding in the polls, rendering it a lesser threat in the event of a snap general election and potentially leading moderate Conservative members of parliament (MPs) to back no deal, in order to protect their seats from the surging Brexit Party.

The odds of an election in the fall are rising sharply. Stephen Gallo, European head of FX strategy at BMO Capital Markets, said in a note Monday that Johnson will have an “incredibly narrow window of opportunity” to exploit Labour’s vulnerability, cut a deal with the Brexit Party to preserve Conservative seats, and lay out a post-EU and domestic policy agenda.

“That window starts to close rapidly by the end of the year, and there is no telling what 2020 will bring without a new parliamentary arithmetic for the Tory (Conservative) leadership to work with,” Gallo said.

“We still believe there is more GBPUSD weakness to come.”

Kamal Sharma, director of G-10 FX strategy at Bank of America Merrill Lynch, said the combination of Brexit factors weighing on the U.K. economy meant a potential “flash crash” for sterling could not be ruled out.

“The current account deficit has been the Achilles heel for the U.K. for a number of years now. Historically, the U.K. has been a very big recipient of FDI (foreign direct investment),” he told CNBC’s “Squawk Box Europe” on Monday.

“It’s now becoming more of a net debt story, so if investors start to suddenly give up on the U.K., for example, given the liquidity situation of sterling already, that really opens us up to a potential flash crash.”

Things can only get better

However, not all analysts were quite so pessimistic. Giles Keating, senior advisor at Torchwood Capital, told CNBC Tuesday that most of the bad news is already priced into sterling and investors could “start to look forward.”

“What do you look forward to? Fiscal expansion — can the Bank of England react to a big fiscal expansion by cutting interest rates? It doesn’t seem to me to make sense. That debate could end up being to hold rates here at a time when others were cutting them,” he told CNBC’s “Squawk Box Europe.”

“The Bank of England is looking at an economy where wages are accelerating. The latest wage rises are really moving up sharply, we had the National Institute warning yesterday of 4% inflation as a risk — the Bank, in my mind, can’t cut against that background.”

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Europe is at odds over who will replace Christine Lagarde at the IMF

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International Monetary Fund (IMF) managing director Christine Lagarde speaks during a press conference in Tokyo on October 4, 2018.

Kazuhiro Nogi | AFP | Getty Images

European officials are still scratching their heads over Christine Lagarde’s successor at the International Monetary Fund (IMF), according to several people with knowledge of the discussions, with no standout candidate for the role.

Lagarde is due to start her new job as president of the European Central Bank (ECB) in November, leaving the IMF’s chair empty. In Europe, EU member states agree that the next IMF managing director needs to be from the continent — but they’re struggling to rally behind one particular name.

“The truth is that there is no readily available tried and tested European all-rounder,” a European minister, who did not want to be named due to the sensitive nature of the talks, told CNBC.

There is no official shortlist of candidates, but many governments of EU nations have put forward a name to take the top job. Some of the non-official candidates are:

  • Jeroen Dijsselbloem, former Dutch finance minister and president of the Eurogroup (which brings together the 19-euro zone finance ministers).
  • Mario Centeno, the Portuguese finance minister and currently Eurogroup chief.
  • Nadia Calvino, the Spanish finance minister.
  • Olli Rehn, central bank governor of Finland and former European commissioner for the euro.
  • Mark Carney, the current governor of the Bank of England — a Canadian citizen who also has Irish and English passports.
  • Kristalina Georgieva, from Bulgaria, who is currently serving as chief executive of the World Bank.
  • Mario Draghi, the outgoing ECB president.

According to two other European officials, who also preferred to remain anonymous, none of the candidates have the right profile at this stage. Some names also don’t have enough experience or they are not liked by certain governments due to their political affiliation, their past comments or their background, the officials told CNBC. Since the IMF’s formation back in 1945, the managing director has always been from Europe.

There is also an age restriction to deal with. The IMF’s rules state that managing directors must be under 65 years of age when appointed and cannot serve beyond their 70th birthday. As such, the chances of certain candidates, such as Kristalina Georgieva, become much smaller.

“If (the) age limit is adapted to today’s realities, there is Georgieva and Draghi,” the European minister told CNBC.

France, who’s chairing the discussions across the different EU capitals, is reportedly looking at ways to change the laws. However, it is unclear whether that idea would be approved inside the IMF.

A source within the French government told CNBC that Paris “does not have a preferred candidate and will play its coordination role impartially.” Meanwhile, a separate EU official confirmed to CNBC that the aim is to have an agreement by the end of the month.

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EU has 35 billion euro list ready if US hits EU cars: EU trade chief

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European Commissioner Cecilia Malmstrom holds a news conference in Brussels, Belgium March 7, 2018.

Eric Vidal | Reuters

The European Union would retaliate with extra duties on 35 billion euros ($39.1 billion) worth of U.S. goods if Washington went ahead with tariffs on EU cars, the bloc’s trade chief said on Tuesday.

“We will not accept any managed trade, quotas or voluntary export restraints and, if there were to be tariffs, we would have a rebalancing list,” European Trade Commissioner Cecilia Malmstrom told a committee of the European Parliament.

“It is already basically prepared, worth 35 billion euros. I do hope we do not have to use that one,” she continued.

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