Trump’s trade war slams Chinese stocks


The US-China trade war continues apace with no clear outcome.

In my view, when it comes to respective stock markets, Chinese investors are feeling the heat far more than their American counterparts.

 

 

 

As of July 18, there’s a wide divergence between the S&P 500 Index (SPX) versus China’s benchmark Shanghai Composite Index (SHCOMP).

The gap has widened more than 20 percentage points to the disadvantage of Chinese investors.

 

 

Source: Bespoke Investment Group


Tariff Pain

The US has slapped tariffs on $34 billion of Chinese imports and Beijing has responded in kind.

If the tariff brinkmanship doesn’t escalate from current tariff levels, the economic damage may not be severe in my opinion.

Right now, Wells Fargo (WFC) sees just a 10% chance of a full-blown trade war. Trump has threatened duties on another $200 billion worth of Chinese goods if Beijing imposes countermeasures.

 

Takeaway

In my opinion it’s hard to see an easy or quick resolution to the US-China trade fight.

The economic rivalry between the world’s two biggest economies seems sure to escalate in my view.

Soon or later, I believe that’s going to get fully priced into the US stock market.

Yet for the moment, Chinese investors are feeling the sting.

Photo Credit: Alfred Weidinger via Flickr Creative Commons

 

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Xavier Brenner
Xavier Brenner
Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.