Donald Trump’s recent victory in the US elections has -immediately- resurrected the ghosts of a trade war between the US and China. The growth of geostrategic and economic tension between both economic powers has been one of the variables that the market has been discounting as the magnate’s victory in the North American elections has been formalized.
Now, there are fears that the new tenant of the White House will dust off the measures he already adopted in 2018. and which he announced during the campaign that he would reissue have been fully taken up by the Asian stock markets, which at the dawn of Trump’s election as president of the new US government (in this Wednesday’s session) have seen how the bears have taken over the parquets.
The Hong Kong stock market has been the biggest victim, with the Hang Seng losing more than one 2%while that of Mainland China has received the one who will be the maximum leader of the first economy on the planet with decreases close to half a percentage point.
“We believe that tariffs are the policy with the greatest potential consequences from an economic perspective of all those proposed by the new president-elect. The 60% tariff on imports from China and 10% on those from the rest of the world could making much of the trade between the United States and China unviable, reducing American domestic demand and corporate profits, and cause lower GDP growth around the world, especially in China,” explains Mark Haefele CIO of UBS, while ensuring that “these tariffs could also contribute to higher inflation in the United States”
“Central banks are increasing their gold reserves to depend less on the US dollar and, in an extreme case, be less susceptible to US sanctions” he highlights. Julius Baer’s Carsten Menke, who notes that “This applies particularly to the People’s Bank of China, which still has a fairly low proportion of gold in its foreign exchange reserves“. In that sense, the Swiss entity believes that “the resumption of gold purchases by central banksparticularly from China, should be much more important than the outcome of the presidential election in the United States.”
From a perspective more linked to the field of currency, Ebury experts emphasize how ““Many of Asia’s currencies that are closely linked to the Chinese economy have traded down more than 1% overnight tonight.”
And more in terms of sector, Johannes Jacobi, from Allianz GIobal Investors, assures that “an increase in tariffs, especially directed at China, “could harm security providers outside the US, benefiting US cybersecurity companies.”
Be that as it may, and as they reflect from J. Safra Sarasin Sustainable AM, we have to see how get married the measures that Trump finally adopts with the stimulus package recently announced from the eastern country that was expected to stabilize the short-term growth of the Chinese economic power. “So far, soft indicators of economic activity indicate a modest improvement, but The measures announced so far are unlikely to turn the economic cycle around and stop the correction of the real estate market.“warns Claudio Wewel, currency strategist at the fund manager of the private banking group.
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