#DontPanic - China/US relations

15 May 2019

Asia’s growth story is more deeply rooted than China/US relations

The US President’s tweet-based trade war with China has hit the headlines and the column inches have been filled with surmise and speculation on the potential effects.

US/China relations are very important for Asia, but the long-term trends powering the region’s economic growth remain and Asian countries are still forecast to grow their GDP faster than developed counterparts.

So, ask yourself the following question: does this issue of trade friction reverse all the underlying growth drivers in Asia?

Asia’s regional consumption, infrastructure growth and technology advantage still exists and will continue to develop. In terms of trade, Asia’s biggest market is itself. The increase in intra-regional trade has been hastened by the formation of single market trading blocs like ASEAN where tariffs have been falling – and this will continue.

In fact, one view is that the net-losers in the trade war will actually be US consumers who may see inflation on the goods and services they import driving up prices.

In short, we encourage you not to panic.

Volatility in markets can actually prove to be beneficial for stockpickers who are able to take advantage of the short-term over-reactions to newsflow to invest at attractive valuations.

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Our approach remains the same: we take a long-term view, based on our fundamental research, focusing on high-quality companies that should be robust enough to withstand periods of turbulence. Most importantly, it is worth remembering Asia’s growth story and that these structural advantages don’t just disappear overnight.



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