What is the impact of the Sino-US trade war

- Nov 08, 2018-

What is the impact of the Sino-US trade war

On March 23, 2018, the Trump administration announced that it would impose tariffs on goods worth $50 billion imported from China each year and limit China's investment in the US technology industry. A trade war between China and the United States broke out.

Who is bad in the domestic industry? Who is good?

From the Chinese side, once the Sino-US trade war emerges, it will inevitably have a direct negative impact on China's economic growth and labor market stability in the short term. In 2016, China's exports to the US accounted for 18% of China's total merchandise exports and GDP. 4.4%. Exports to the United States are not only concentrated in traditional labor-intensive industries, such as toys, furniture, and textile exports to the United States, which account for about one-third of all exports in the industry, and with the upgrading of China's manufacturing industry, capital-intensive. Exports to the United States, such as electronics and machinery, have also increased substantially, and exports have surpassed labor-intensive industries.

In addition, what other industries will receive the impact?

Financial industry: A-share pressure is good for risk aversion

In terms of direct investment, the direct investment of the United States in China in the past decade accounted for 3.3% of China's total FDI. In the past ten years, the number of US-funded enterprises in China has exceeded 1 million, and the proportion of China's major export commodities in other major exporting countries. It is already quite high, and the space for further increasing the export ratio and market share is extremely limited. Finally, it is estimated that it is difficult to find an alternative market for the US market.

Ping An Securities believes that the escalation of Sino-US trade war will also bring fluctuations to China's financial market.

Comparing the market value of the A-share sector (Shenwan Class II), which is greatly affected by the trade war, it can be found in chemical (including plastic rubber), machinery, non-ferrous and non-metallic mineral products, electrical equipment, home appliances, steel and textiles and clothing ( The market value of the products including footwear and leather products accounted for more than 1%, the market value of furniture sector accounted for 0.5%, and the total market value of each industry accounted for 21.1%.

If the market value is used to measure the impact coefficient of the sector on the entire market, the United States is in chemical (including plastic rubber), machinery, non-ferrous and non-metallic mineral products, electrical equipment, home appliances, steel and textiles (including footwear and leather goods). In the field of trade wars, in addition to the negative impact on the relevant sectors, it will also have a significant impact on China's entire stock market.

Guangzhou Bandung believes that the index is weaker in the short term. If there is a big panic diving in the face of a bullish overweight, then the unicorn concept stocks will also have a strong compensatory decline, so investors who are currently involved in the concept of speculation should stay one more eye. Investors who have not eaten the other themes of this cake game should not rush to bottom out, and they should not fill the position at once, temporarily controlling the position and preventing risks.

At the same time, however, risk appetite has declined, which is good for safe-haven products such as gold and bond markets. As of 11:00 yesterday, London gold rose nearly $10.7 from the opening.

Agriculture: benefiting from China's counter-action

China intends to include tariff items on the list of tariffs on US imports, and tentatively includes 7 categories and 128 tax items. According to the 2017 statistics, it involves US exports of about US$3 billion to China. The first part has a total of 120 taxes, involving US$977 million in exports to the US, including fresh fruits, dried fruits and nut products, wine, modified ethanol, American ginseng, seamless steel pipes, etc., and is subject to a 15% tariff. The second part consists of 8 taxes, involving US$1.992 billion in exports to the US, including pork and products, and recycling of aluminum. The proposed tariff is 25%.

The tariff increase on pork products has not only made the pork concept of the stock market soar, but also a good news for companies that operate pig farming. In addition, some fruit growers will also benefit from tariff increases.