Making money: what the experts think

Finding positives

After another rocky week on markets, said Gavin Lumsden on Citywire, traders have become so used to conflicting signals from the White House that they’ve almost learnt to love them. “At this point, markets are treating confusing guidance as a de facto positive,” observed Ken Odeluga of City Index. “Any delay that results offers a chance for less damaging trade solutions to prevail.” On the plus side, the global economy is still looking healthy enough. Yet there’s a sense that many are battening down the hatches against rising “macro uncertainties”. Blackrock’s global chief investment strategist, Richard Turnill, is urging everyone to build “increased resilience into portfolios” – noting that even if the US and China avoid a full-blown trade war, tensions between the two could hurt business confidence and growth.

EM exits

Investors in emerging markets are already on the move, said the FT. Investors pulled a record amount of money from global and emerging-market equity funds last week ($8.1bn and $6bn respectively) as a “shockwave ran through East Asian markets”. This isn’t yet on the scale of the 2013 “taper tantrum”, but the drivers of the turbulence are familiar enough. In addition to “rising trade tensions”, there’s anxiety that higher US interest rates and a resurgent dollar could affect liquidity, “adding to the pressure on emerging market currencies” – already 10% off their January peak, according to the benchmark JP Morgan index. Repeated rounds of Us-china tariffs won’t help, said Seema Shah of Principal Global investors. The likelihood is that “emerging Asia will be collateral damage”.

China’s “toxic dilemma”

Until recently, many traders viewed China as a “safe haven, impervious to trouble sweeping other emerging markets”, said Ambrose Evans-pritchard in The Daily Telegraph. No longer. The yuan this week fell to its lowest level this year against the US dollar “after the People’s Bank opened the monetary spigot to avert an economic slowdown”. The “hawkish US policy” currently pushing up the dollar “creates a toxic dilemma” for the Chinese. “If they loosen policy too much to shore up their economy, they risk a rapid slide in the yuan, unsettling Chinese investors and triggering capital outflows.” The People’s Bank of China is “walking a tightrope”.