Is it a time to get into or out of the stock market?
After the US-China trade war escalated last Friday, the stock markets in US and China remain silent. And some of my friends are just curious about is it a time to get into the stock markets again. In my opinion, it is so difficult to predict how politics factors affect the stock markets and economies.
While the stocks markets have a lack of information and directions, individual investors should be careful. As China’s economy is slowing and fewer investments opportunities, I do not see any reason for buying stocks in China. Actually, we should reallocate our investments assets instead of putting too many eggs in one basket.
Trade war anxiety is spreading in the stock markets especially in the US, China and Hong Kong.
While China’s government has unleashed $108 billion in reserve cut for most banks, the stock markets in China and Hong Kong are still shrinking surprisingly. And Hang Seng Index and Dow both have nearly 10% decline from previous highs. Some greedy individual investors just cannot wait to buy stocks in this bearish sentiment. However, for the major investors, they are looking for not less than 20-30% gains from the stock markets.
Assume Dow will increase to 26,000 points and HSI will get back to 32,000 points in the future, the stock prices will still have 10% or more corrections and there is still a period of time to be patient.
Will trade war really start? It is difficult to say “Yes” at this moment as you know that it is not the first time for the US president Donald Trump to say trade war with China.
After the ZTE issue, China’s government does not want trade war with the US and realizes that they have not yet fully prepared for the trade war. The technology industries are still relying too much on the chips from the US. And it reveals that the fastest-growing GDP of China depends on the US technology suppliers. China technology industries still remain copying instead of creating. It seems that the US find the way to negotiate with China for the big trade deficit in the past. On the other hand, the US does not want a real trade war with China as well and just treat it as a negotiation. Please note that Donald Trump is a well-known business man and know how to scare the investment markets. While the stock and commodity markets are shaking, it could be the time for buying low.
Trump-Kim summit on 12 June 2018 surprised the whole world especially China. China has been playing a very significant role in North Korea diplomatic relation, however, she may feel a little bit isolated in the summit yesterday.
When everyone is clapping hands for the US President Donald Trump and North Korean leader Kim Jong Un, some may ask where is China, who used to be the key player between the US and North Korea. China is becoming the second largest economy and playing an influential role in global political issues in these ten years. And She was just absent in the summit yesterday. While Singapore was playing the perfect host for the summit, China only provided Mr Kim with aircraft for the trip.
During the presidency of Donald Trump, The US President sparked the trade war with China by ZTE issues and now he strongly sent the message to China that the US has a major participation on Korean Peninsula by this summit. Following the US Federal Reserve rising the interest rates, the global especially emerging markets will focus on the economic influence of the US again. Do the series of events mean that China is still too young to fight against the US?