China is the favorite for investors despite growing commercial quarrel
We do not believe that commercial tensions are going to escalate to a serious level, says BNP Paribas.
China's currency, stocks, and bonds are among investors' main assets in 2018, as they expect the Asian country and the United States to finally overcome their disagreements to avoid a costly large-scale trade war.
Unlike in 2017, when the scenario of stability in the global growth rate and low inflation generated a generalized rise in Asian markets, this year there have been sudden challenges for investors, such as the possibility of more rapid increases in interest rates, the interest of the Federal Reserve and a reversal of the downward trend of the dollar.
In addition, there is a risk that the tariff war will get out of control.
The trade situation remains tense after US President Donald Trump threatened to impose tariffs on China for another USD 100 billion in goods and also anticipated that Beijing would make concessions.
China has warned that it is prepared to respond "with ferocity" to US measures.
Asian markets have been volatile since February when the United States imposed tariffs on steel and aluminum imports and renegotiated a trade agreement with South Korea.
"We do not believe that commercial tensions are going to escalate to a serious level," said Daniel Morris, investment strategist at BNP Paribas Asset Management in London. "We believe that there will be some periods of volatility, but the real path is the status quo, or perhaps an improvement of the commercial landscape in the long term," he said.
Morris said his fund still holds shares under the name of "overweight" and sees a return of volatility in the markets as an opportunity to acquire assets at lower cost.
Josh Crabb, head of equities in Asia at the Old Mutual Global Investors, also increased its placements in Chinese assets after determining that they are still low and anticipate that the trade dispute will be resolved.
Chinese stocks represent the largest proportion, of 25 percent, in the investment strategy in Asia of 1.1 billion dollars at Janus Henderson Investors.
Fund managers argue that steel and aluminum over which the United States has announced tariffs account for a small proportion of Chinese exports. China's specific rates also exclude many electronic products, such as Apple's iPhone.
(With inputs from Reuters)