Supply Chain Realignment to Reshape Global Investment Landscape
A good article for investors. As the US frees up what use to go to or come from China, nations will be looking into getting a piece of the action. Also look at Chinese actions for investment possibilities.
The deteriorating relationship between China and the United States will have profound impacts on the global markets. Nationalism was already on the rise on both sides of the Pacific when the COVID-19 crisis exposed vulnerabilities to the global supply chain. As global trade reorients, certain countries will prove to be better aligned to capture relocating U.S. manufacturing. Investors should watch closely for the forerunning signals of which countries will benefit.
The global economic shock of COVID-19 has prompted commensurate fiscal and monetary responses from governments and central banks. For investors in global securities markets, recovery in growth and employment are the key variables to watch.
In the near term, growth will face the headwinds of continued shutdown risks and increased consumer savings (thus depressed consumer spending).
Over the long term, a robust recovery will be challenged by a sea change in supply and demand factors. National security concerns in the U.S. will drive production back to America and introduce it in other Western Hemisphere countries. Consumer behavior will shift as new technologies continue to disrupt old business models and practices. And the burden of increased debt will dampen future consumption. It is too early to say how these issues will play out, but investors should pay attention for signs of the winners and losers in the post-COVID recovery.
Chinese infrastructure investment is expected to pick up substantially this year. The focus of this investment will target both the old economy of transportation, pipelines and upgrades to residential buildings as well as new-economy projects. The latter, which are likely to be more durable in my opinion, include 5G applications, next-generation information networks and electric-vehicle infrastructure.
The formation of a new geopolitical landscape, however, will counterbalance the drivers of growth in Asia. Under its newly re-elected president, Taiwan has embarked on a more hawkish stance to mainland China. In response, Beijing will likely increase pressure on Taiwan’s economy. It will be important to see how Taiwan develops supply chains with the Western world.
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Originally Posted by Peter1469
