Investors need to assess the impact of growing nationalism

Investment fund update

The FT Fund has made reasonable progress this year. The decision to make the MSCI World Index the largest single shareholding in the ETF’s portfolio helps: In the context of mood swings, investors shift from wanting low-value stocks to seeing some long-term gains for us Digital giants powered by the major economic revolutions of this era. This makes department-based strategies dangerous.

We decided to shut out any fund that invests in China’s major indexes. This has paid off, as China’s prudent economic policies and its increasingly tense relations with other countries have led to poor performance so far in 2021. Taiwan is more popular than mainland China, which gives the fund a boost because Taiwan has always been one of them. Best performer The stock market in the past year.

Global investors are still worried inflation And stimulate the world. They also need to assess the impact of the growing nationalism that is now sweeping the economy.

This is the era of leading governments to hold international conferences. Groups of G7 and G20 countries are busy agreeing on a global tax system for companies. The environmental conference seeks to develop detailed routes for countries to achieve net zero emissions and requires commitments to protect species and plant more trees. Trade negotiators are still busy seeking to reach more agreements between major trading nations and trading blocs.

It’s as if globalization has swept through like before the pandemic. Many investors believe that globalization is a good thing for the world economy and their returns, because innovation is spreading rapidly around the world, and large companies invest and hire workers on all continents to improve living standards and deliver the latest goods and services.

Investors want China to shift from joining the World Trade Organization to adopting a more Western approach to common behavior.

Today, how negotiators can translate goodwill into binding treaties is problematic because countries are still unwilling to put their taxation or environmental policies under the control of the world.

Under this obvious framework of international cooperation, there is a darker world hidden.The relationship between China and the United StatesThe two largest economies and military powers have become very nervous. President Donald Trump’s “make America great again” has evolved into President Joe Biden’s plans to create more in the United States.

China continues to advance its “Made in China 2025” and “One Belt One Road” initiatives, seeking to provide most of its domestic demand and expand its economic influence through a strong local base. Not only did Biden fail to ease the tensions between China and the United States, but on the contrary, he expanded the areas of intense disagreement by criticizing China more. human rights Records and government Hongkong Compared with his predecessor, the Chinese are very sensitive to criticism.

More and more authorities are not just asking which is the cheapest and easiest solution, but which solution will reduce the impact of foreign and potentially hostile influences on the national economy.The Chinese are busy building bigger Deepwater fleet And the Air Force, and regularly approach the West by flying and sailing to test the West’s resolve TaiwanThey warned Western navies not to use the international waters of the China Sea, and sought to strengthen and expand a series of islands and atolls to advance their territorial claims.

Both Russia and China allow regular cyber attacks on Western computer systems and intellectual property. As the United States and NATO reduced their troops, Russia has gained a strong position in Syria and the wider Middle East.

Both sides have a feeling that every great country or alliance must protect its own technology, ensure its own supply of food and raw materials, and have its own friendly and cooperative countries. These countries have more intensive trade and receive assistance from world leaders. and support. group.

All of these will have a knock-on effect on the market.There is a drive on both sides of the Atlantic Prevent more merges And the acquisition involving Chinese capital.There is a strong move to produce more things on land, from semiconductor To the battery, from food to energy.

More and more authorities are not just asking which is the cheapest and easiest solution, but which solution will reduce the impact of foreign and potentially hostile influences on the national economy. Companies agree with this and look forward to more subsidies, more preferential orders, some tariffs, and more acquisition protection as a price to aid countries that are now more worried about national resilience.

Investors must figure out which countries, sectors, and companies can benefit, and the impact of less diversified supply chains and fewer contracts with cheaper suppliers in the world.

At the same time, China announced Regulatory war Relying on their own technology entrepreneurs and great companies adds to the dilemma of the bear market. As I fear, President Xi Jinping is now more focused on control and power, rather than allowing free enterprise to help China catch up or surpass the technological success of the United States.

Sir John Redwood is Charles Stanley’s chief global strategist. The FT fund is a virtual investment portfolio designed to demonstrate how investors can use a wide range of ETFs to access the global stock market while reducing investment costs. [email protected]

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