SINGAPORE (June 10): It’s time for investors to start thinking seriously about the impact of US President Donald Trump’s executive orders on investments on both US companies and Chinese companies that are listed in the US. This is swiftly moving from the potential outlier scenario to a very real scenario with rapid impact.
The first scenario is the impact on US companies that have China as a major component of their profitability. I travelled with a colleague this week to Beijing, and it was his first time in China. Among other observations, he was impressed with the large number of US-branded cars. He is a US fund manager. I pointed out that these were American cars manufactured in China and for sale only in China. Now he is worried because the closure of this profit centre impacts on his fund holdings in American car manufacturers.
The first scenario affects companies like Starbucks Corp and Apple that now find China contributes to most of their total global and US sales. A blacklisting of Apple — no different from the backlisting of Huawei — would have a catastrophic impact on your investment in Apple.