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HSBC chief strategist: new agreement won’t resolve trade tensions

HSBC chief strategist: new agreement won’t resolve trade tensions

Wed, 01/22/2020 - 11:39

After years of wrangling, the US and China finally signed the long-awaited phase one trade deal on Wednesday, but that doesn’t mean that investors should rest easy. At least, that’s the opinion of Joseph Little, global chief strategist for HSBC Global Asset Management.

Speaking to MarketWatch, Little stated that ‘There are still concerns about the macro outlook, about the structure internationally, with the US still challenging the nominations for the World Trade Organization’. The HSBC global chief strategist manages over $500 billion in assets, and is not sure that the new deal will calm a volatile market: ‘The [trade] environment remains very much in flux and a source of concern and challenge for investors’.

What does this mean for investors?

The details of the phase one deal are unreleased as of the time of writing, but the trade negotiations between the two economic powerhouses are just one of the major issues rocking the market. Political and environmental issues around the world are also causing instability and could likely limit returns on assets. ‘I think it’s hard to get very confident that we’re going to see a significant, strong synchronized global phase of expansion, and equally in investment markets’, said Little.  ‘It’s hard to get very positive that we’re going to see a very strong phase of market returns’.

However, Little is no bear and he does see some silver lining in this turbulent environment. For one, he believes that US stocks could return 6% or 7% in 2020. He is also optimistic about improved access to trade data and sees opportunities in China, Korea, Taiwan, and Japan. When it comes to commodities, HSBC called gold ‘unreliable’ as a hedge but is bullish on oil and energy.

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