SINGAPORE (July 2): Trade what you see or trade what you believe? It is a key question facing investors as the US-initiated trade wars continue to develop. Our focus is on China, but the same questions apply to investors with exposure to European and US stocks. Nobody wins in a trade war, but some lose less than others and that result is a poor measure of success.

China is rapidly developing alternative markets. The Belt and Road Initiative is a central part of this strategy. How companies can work with this strategy is the subject of the One Belt, One Road conference to be held in Darwin, Australia, in July, where experts from China will discuss the issue. In contrast, the US seems intent on reducing the markets in which it can operate easily as one-time friends Canada and Europe are faced with a tit-for-tat trade tariff response. It is probably only a matter of time before Australia is subjected to presidential tariff whims.

Investors are watching the US companies that are more exposed to Chinese retaliation. This includes Boeing and major US car manufacturers. China is by far the largest export market for the US, larger than its own domestic market.

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