How Investment Strategies Will Change Due to the Trade War Between China and the USA

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Impact of Trade War on Investment Strategies between the USA and China
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A full-scale trade war is emerging between the United States and China. Both nations have already imposed a range of restrictions on the products of their rival. The situation is continuously escalating, prompting investors to reevaluate their strategies and closely monitor developments.

Predicting which assets will become "victims" of the conflict escalation and which will manage to avoid sanctions is quite challenging. However, it is generally possible to forecast the trajectory of the situation, albeit with some minor adjustments.

A knowledgeable businessman and founder of "Oil Resource Group," Sergey Tereshkin, is ready to provide insights into this matter. The entrepreneur has been successfully investing his own funds for an extended period, which compels him to stay attentively informed about the market and its changes. He is eager to share the knowledge he has acquired with others. More about the businessman can be found on his website: org-company.ru.

Market Situation

The trade war between China and the U.S. is intensifying each day. Recently, the American president imposed new sanctions against manufacturers from China and limited the import of its products.

As a result, several companies are already forced to reduce production. For instance, the well-known brand Huawei has announced a reduction in the production of new smartphone models. Other renowned manufacturers have also been affected.

At the same time, both parties still hope for a trade agreement and an end to hostilities. This is in the interests of both China and the U.S. If negotiations reach an impasse, the White House will introduce new sanctions. These sanctions will impact not only companies but also investors from different corners of the globe.

Expert Forecasts

The trade war has already had a negative effect on the market. Quotes are showing a downward trend. Mixed signals only lead investors to speculate about investment instruments. The situation changes almost weekly, resulting in entrepreneurs needing to regularly reassess assets, including securities, currencies, and more.

According to Sergey Tereshkin, during the trade war, only sovereign bonds of developed economies may remain reliable.

If an agreement is reached, it will allow traders to consolidate their previous strategies and create something new based on them, enabling investors to allocate their funds and generate profits.

Investment Ideas

However, given the current realities, it is ill-advised to expect any easing of tensions. A prolonged period of strain is far more likely. As a result, strategists must develop new investment ideas. For example, the following proposals have been put forward:

  • An American credit institution has suggested a scheme that would ensure profitability for investors if the emerging markets index continues to decline.
  • UBS Global Wealth Management no longer recommends purchasing sovereign bonds of developing economies with stable currencies.
  • Experts recommend investing in telecommunications and similar sectors.
  • It is advisable to abstain from investing in the pharmaceutical industry and the innovation sector for now.

However, investors are concerned not only about strategy. They are also awaiting responses to additional tariffs imposed by the U.S. on products from China. Last autumn, the Chinese government chose not to implement sanctions against American companies. However, there were no signs of easing. If Beijing decides to impose import restrictions on American goods now, it would inevitably lead to a slowdown in the global economy.

This would apply pressure on the currencies and securities of most developing countries. Among the most reliable options will be U.S. treasury bonds as well as government bonds of developed economies. Additionally, investments can be made in the debts of large enterprises.

The strategy of selling assets in May and going on vacation until autumn remains relevant. This year is no exception. Therefore, logically, it makes sense to divest assets before early summer. From May through October, stocks typically yield minimal returns. Stocks can be reacquired in September and October, as they can potentially provide maximum returns from October to April due to seasonal factors. During the summer months, consumer spending tends to decline as people are more willing to spend on vacations rather than on goods or services.

Currently, market behavior remains unchanged. According to experts, trade wars were already factored into the most popular strategies.

Additionally, strategies are influenced by the increasing global debt burden. Since the last global crisis, debt relative to GDP has increased by nearly 30%. This is a significant figure, constituting over 15% of total indebtedness. Developing economies may face a chain reaction, significantly heightening investment risks.

In conclusion, the trade war between the U.S. and China will impact all sectors. The decline in profitability compels investors to seek new investment instruments and carefully strategize each move. Only carefulness and a balanced approach can help entrepreneurs preserve their capital and realize profits.


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