Investors seek safe haven

“Japan’s equity market will remain jittery due to the strong importance of exports in driving GDP and also a stronger yen, which is deemed as a safe haven currency, will make its exports more expensive.

“Selling pressure remains on China and Hong Kong markets.”

European and South Korean markets would be less impacted, it added, since they were included in the exemption list alongside Argentina, Australia and Brazil but they might still be less attractive as investors seek a safe haven.

“We feel that investors who seek to cushion their portfolios against the risk of a full- scale trade war should ensure that they are not overexposed to export- oriented equity regions or sectors that are highly dependent on global supply chains as these will be hit by a combination of rising input costs due to tariffs, and possibly also supply restrictions.”

AmInvestment Bank called on investors to have adequate global diversification, including assets in the US where some sectors could benefit directly from the tariffs such as steel manufacturers.

“They should consider equity put options to reduce portfolio volatility. Put options are financial instruments that give traders an option to sell assets at an agreed price on a particular date, thus allowing traders to hedge their portfolios.”