President Trump’s attacks on Chinese companies as part of his US/China trade war have set a “dangerous precedent”, according to Martin Currie’s Kim Catechis.
The ongoing trade war had been happening for the past four years and created a turbulent and volatile marketplace as a result which could last for another decade.
Catechis, head of investment strategy at Martin Currie, particularly focused on the attacks Trump had made on Chinese companies such as mobile phone manufacturer Huawei as well as social media sites WeChat and TikTok. These attacks were designed to stymie the Chinese firms and boost US ones.
He said: “The aggressive moves against specific companies by the Trump administration, however, have set dangerous precedents. It is not just a question of adverse publicity being driven by an unguarded tweet, it can impact the revenues and profitability of third-country companies, as has been demonstrated by the pressure campaign on Taiwanese TSMC in order to get at Chinese Huawei.
“In this case, TSMC enjoys a leading position in the industry, so the company has options that others would not.”
This would mean investors would have to change their tack when it came to selecting investment options and place more consideration on an asset’s geography. This, Catechis said, was a style that had not been used “in decades”.
“Investors need to stay abreast of developments and understand the perspective to identify companies that are particularly vulnerable. At the same time, investors should be planning for a future where an asset owner’s geography effectively determines the investment universe – something we have not considered for decades,” Catechis said.
