The US-China trade deal: too good to be true?

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The trade deal between China and the United States should be concluded in June and rightfully celebrated, yet it is unlikely to last as the objectives of the two countries are too divergent. Any deal will be more of a pit stop in a repeating process that will most likely last for two decades as China’s population peaks in 2025 and China’s economy becomes more vulnerable with lower potential growth.

Impact: While the China/US trade deal will be celebrated ahead of its signing, the odds are that some doubts about it falling apart in a year or two should then eventually emerge. Such risks continue to suggest holding defensive/value stocks as a hedge within a wider equity, absolute return and flexible fixed income portfolio.

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