Opinion | How does the astute get ahead of the curve before China and the US get past their present squabble?
The sensible bet would be on China and the US getting past these disagreements, coming to an arrangement that is more equitable, and therefore more sustainable
“The political object is the goal, war is the means of reaching it, and means can never be considered in isolation from purpose.” -- On War, Carl von Clausewitz,
The trade dispute between the US and China will deteriorate before it improves. The jarring re-pricing of technology stocks has further to run. And normalisation of central bank policy will continue to spook the bond market.
Why then, am I still positive towards risk? And why do I see currently weak investor sentiment and poor market price action as a buying opportunity?
Let me explain. Much of the current market uncertainty – including the tech wreck - relates entirely or partially to escalating trade tensions between the US and China, and the prevailing fear that an all-out trade war could tip the global economy into recession, causing subsequent carnage in the market.
It’s why – over the last week or so – the MCSI China Index is down 4.2 per cent, the Hang Seng is down 3.5 per cent, and the S&P is down 3.9 per cent.
And of course, were an all-out trade war between the world’s two largest economies erupt, then almost certainly the global economy would encounter severe headwinds. And almost certainly a bear market would ensue.
