Asian Stocks as Good as New
Ever since China struck its mid-week counterblow to the US, the trade war has entered unchartered depths. Investors are pulled further into an abyss of uncertainty, but Asian markets appear to have found an air pocket to breathe.
Another round of trade conflict has left economic shrapnel everywhere, with investors having rushed into the safety of bonds. Market players who’ve braved the stock conditions are clawing back some lost gains, but they have little time to rest. Despite Chinese President Xi letting his country’s currency slip, to his relief, he’s found his economy still in one piece.
That means the yuan is still worth most of what it was yesterday. That, and aggressive cuts to interest rates in Asia and Australasia have made it cheaper to take loans, and easier to stomach risk. Trade imports and exports have also been the tone of surprise, “a moderating decline in imports suggesting improved production in domestic China,” according to Ken Cheung Kin Tai, a chief foreign exchange strategist for a Hong Kong bank. That’s why investors on both sides of the world are so quick to their feet. China’s saying “is that all you got?” to Trump!
In the short-term, neither can live while the other survives. It’s nigh impossible for the trade war to go on forever. One side must eventually cave in. That’s why the alphas in the market continue to peruse exchanges with a wry smile. After turning over enough rocks, there will be stocks found that offer permanent prospects for a temporary bargain. Like trade deals, stock deals take some digging, especially in the longest bull run ever recorded. However, it’s the grit and hustle to dig that we in the market call our “edge!”