President Trump finally has signed the phase one trade war truce with China on Thursday, December 12th, 2019. After the release of the news, US markets flew off and never looked back ever since. Some of the most significant questions conservative investors are asking now are such as, what is the significance? Does it signify the trade war initiated by Trump has come to a halt? What about phase two, phase three? Could it be possible to reverse all the damage caused by previous tariff hikes? Will such damage be hidden as of now and show up in the next quarterly report?
These are valid questions any cautious investor would be asking. It seems that the signing of such agreement does not solve the entire trade war issues. There are much more to work with. However, the struggle within these investors are such that; are they going to wait any longer? The market is seemingly laughing at them and flew as high as the sky. How should we look at it now?
Long Forgotten Event
This experience reflected a similar scenario way back 2014-15 triggered by the Grexit crisis. Whenever there was an unresolvable issue with Greece came up, global market trembled and crashed substantially. There was a significant fear that the Greece financial collapse would finally lead to European economic and political crisis as a whole. Finally, when an agreement of resolution was signed between the disputed parties, market flew to the sky and never looked back ever since. The signing of resolution agreement does not solve any financial crisis created by Greece. In fact, this Greece financial crisis issue appeared in economic news again recently, but the market did not pay attention to it anymore.
This past experience shows us that market reaction to economic crisis is selective and elastic. If any crisis event has been overdone, global stock market’s reaction will become immune over time. I believe this trade war crisis would have a similar outcome. Once this signing of the first phase trade war truce is done between the US and China, global market will put every other issue related to trade war crisis behind. Though trade tariff hike for other products remains, and Trump would possibly reignite other issue, like trade tariff against imported European cars, global market will basically ignore them.
Dawn of Investment
Therefore, we should not wait any longer until every issue has been resolved. It is time to jump into investment from now. The best focus for our investment would be those countries or regions badly affected by the trade war. Emerging markets would be once again return to our investment focus if you do not prefer a high risk investing into a single country such as China. These emerging markets will nevertheless include China and Hong Kong markets as well. Please read their fund investment Prospectus or Fund Factsheets.
Aside from the US market, Malaysia market will be another single country you may consider highly. Malaysia market has been badly beaten down by the trade war because of China as a victim. If China’s economic activities improve, the benefit will flow into Malaysia market. For other recommendations, please read Fundsupermart’s recent article entitled “The dawn of a major upswing.”
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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions. This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to conclude individual decision.