(Nov 18): The only feature that can be relied upon in the US-led trade war with China is that US President Donald Trump cannot be relied upon. Anything tweeted can be untweeted and that makes for a difficult investment ride. Both the Dow Jones Industrial Average and the Shanghai market reacted strongly to the on-again, off-again comments last week about tariffs.
Investors like stability, and even traders prefer volatility that is predictable rather than chaotic. These features are absent from global markets and that adds risk to long-term investments. This is reflected in the rise in the gold price and reallocation of capital flows.
The alternative to the chaos inflicted by the White House is the stability of China’s Belt and Road Initiative (BRI). Its features were on show at the China International Import Expo in Shanghai and at the BRICs meeting in Brazil. Stability is attractive for investors and even more so it if offers opportunities to move into emerging growth markets. Although there is no single instrument that can be traded, these markets offer individual investment opportunities that can be easily reached through a variety of exchange-traded funds.
