SINGAPORE — Investors ought to not be “too bearish” about the marketplaces even if stress in between the U.S. and China continue to increase, the president of South Korea’s sovereign wealth fund stated today.
That’s in part since relations are not likely to move in the near term, stated Choi Heenam of Korea Investment Corporation.
“The U.S.-China dispute isn’t just political,” he informed CNBC’s Tanvir Gill on the very first day of the Singapore Summit. “It’s a hegemonic conflict based on structural problems rather than political interest.”
“I think it will continue to be an overhang for the global economy, but ultimately, not destructive,” he stated on Monday.
He stated he does not see U.S. hawkishness towards China altering much after the governmental elections in November since there is bipartisan assistance for Washington’s present policy towards Beijing.
“With that in mind, we don’t need to be too bearish about the market, even if tensions between the two countries escalate. Instead, we need to take advantage of the ‘risk-off’ mode in the market, if there is any.”
A risk-off situation is when financiers are less tolerant to threats and sell possessions, lowering rates.
Choi likewise weighed in growing of protectionism and stated it would “definitely hinder” the advancement of brand-new innovations.
“As the natural result of the pandemic crisis, more countries … tend to concentrate on national interest rather than global interest,” he stated. “That means tech nationalism is going to be intensified. That is very bad news for companies.”
In addition to their trade disagreement, the U.S. and China have actually likewise been secured an innovation war, with Washington putting pressure on Chinese innovation companies.
The U.S. is attempting to stop Chinese companies, such as mobile phone maker Huawei, from acquiring essential elements. The U.S. Department of Defense stated this month it might blacklist Semiconductor Manufacturing International Corporation, China’s biggest maker of semiconductors.
Choi stated Korea Investment Corporation tends to invest more in American innovation companies, however acknowledged that there’s “obvious competitive advantage” for some Chinese business. KIC requires to strike the best balance in between both nations, however “destructive” forces can trigger business to lose their one-upmanship, he stated.
“That’s going to hinder our investment interest,” he stated. “My concern is really on that issue, so my hope is that everything is going to be solved peacefully and easily.”