SINGAPORE (Apr 15): Where do I allocate my long-term investment capital to maximise growth? Globalisation offered many opportunities and a means to diversify risk. It made sense to allocate funds to US markets and to the fast-rising Chinese markets. I, like many others, allocated investment capital to companies that did business with China, to companies that depended on China production for their success, to Chinese companies that were moving into international markets and to companies that benefited from Chinese growth. Some may argue that many investors are overweight China and that is now potentially a problem.
The foundations of global investing are being undermined by an already ferocious strategic battle over technological supremacy between the US and China. The concerted “security” attacks on Huawei are just a small example of a spreading contest that many investors haven’t come to terms with yet.
This is no Cold War, and analysing the developing situation through this lens is not useful. This is not a repeat of the Cold War with the Soviet Union because even at its height, the Soviet Union could not lay claim to any significant economic clout. It was a military state that struggled to feed its own people. China is a global economic power and its attention is primarily focused on trade relationships.