In this video, Dr Ashwin Alankar, Head of Global Asset Allocation, discusses why China may have patience on its side in its escalating trade war with the US.
The US/China trade spat reached a new level with both sides raising tariffs on a range of goods, a development that sent shockwaves through global markets.
While on the surface China may appear to have more to lose, given the prominent role exports play in its economy, it may have more levers to pull to combat the deleterious effects of tariffs, namely additional fiscal stimulus and directing its controlled currency.
The US, on the other hand, has fewer tools at its disposal as Congress, with a Democratic-led House of Representatives, is unlikely to work with the White House to provide a stimulus package to support the economy in advance of next year's elections. This scenario is reflected in options market signals as the upside potential of Chinese stocks exceeds that of US-listed shares.
Recorded on 15 May 2019.
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