Global markets thrive on stable, positive trade outlooks. The level of tensions we’re looking at with China threaten that. In particular, we could soon see higher prices for manufactured goods. As many countries reduce their exposure to Chinese supply chains.
Here are some of the mid-range implications:
- Manufacturing could move south and west to the likes of Vietnam, Thailand, Indonesia, and India. A lot of electronics manufacturing is already operating in Vietnam.
- This could reduce the supply-chain price shock, but slow economic growth and market returns in China.
- A slowdown in China will continue to dampen global demand and the outlook for equities.
- Potential military conflict in the South China Sea and the flashpoint of Taiwan could further slam equities and send the gold price soaring.
- A resurgence in local manufacturing in the US, Europe, and Australasia could fuel new capital growth and require skilled migration.
Here’s what I’m doing as an investor to position:
- Doubling down on slammed domestic sectors not exposed to travel — financials, property, and homebuilding.
- Increasing exposure to mining (gold) and infrastructure.
- Favouring defensive sectors like consumer staples, utilities, and healthcare.
- Looking to acquire real property outside major cities.
- Reviewing opportunities to enter tech businesses at low points.
Most tech stocks are still, in my view, very expensive.
But there is one tech stock in which I see both value and upside…
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