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| Source: Nikkei Asian Review |
The Hong Kong district election and the US president impeachment process dominated the news wires in the month of November as the US stock market continue its ascend to record highs. The global economic data continued to bear mixed messages while the US China negotiators are still working to get some resolution before the 15th of Dec deadline where the next tranche of tariffs may kick in. However, hopes that a trade war breakthrough will happen were dimmed by the passing of the Hong Kong Human Rights and Democracy Act into law and the possibility of passing of another law where China leaders can be sanctioned for the treatment of ethnics Uighur in Xinjiang. Both acts will anger China and this may derail the trade talks.
However the stakes of derailing are high as the next round of tariffs will hit essential consumer goods which will hurt both US and China. As of now, it seems like the Chinese are hitting back verbally while trying not to derail the progress of the trade war but anything can happen from now till 15th. Whether the US stock market can continue to rally will probably rest on the results which we will know in the near future.
While the US and European stock markets have rallied, the Asian stock markets still continue to languish as the Asian economies are still suffering from the slow-down from the Chinese economy.
Portfolio Strategy
The portfolio which is heavily weighted into the US stock market benefited from the record highs reached by the US stock market and delivered good returns of 1.3-1.8% for November. Due to the ambiguity on how the US China trade war will turn out, the current portfolio composition will be maintained unless there is a drastic change in the current economic and geopolitical environment.
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