Evans Chamberlain Asset Management - Investors Appear Unworried as Trade Tensions Worsen

TAIPEI CITY, Taiwan, October 11, 2018 (Newswire.com) - Although investors still seem willing to take on substantial risk in the face of global trade tensions, the International Monetary Fund recently cautioned that further escalation of the trade dispute coupled with increased geopolitical risks could cause a rapid decline in investor sentiment.   

Analysts at Evans Chamberlain Asset Management believe that, with risks rising in the global financial system, escalating trade tensions could be the tipping point and cause another global financial crisis.

According to the IMF’s recently released Global Financial Stability Report, investors still seem complacent. The biannual report summarizes the IMF’s views on global financial conditions and risks in the system.

US stock prices have reached record highs several times during the course of this year. Evans Chamberlain Asset Management analysts say this indicates strong investor sentiment but that the ongoing issues surrounding global trade could cause a sudden sell-off if investor sentiment turns.

The IMF recently stated that economic growth is being threatened by disruptions to global trade. It reduced its economic expansion forecasts for 2018 and 2019 to 3.9 to 3.7 percent respectively.

Evans Chamberlain Asset Management analysts say elevated risks from ongoing trade disputes between the US its trading partners have come at a time when emerging market countries like Argentina and Turkey are under pressure. Rising US interest rates have caused emerging market currencies to plunge against the much stronger US dollar.

While the IMF says that problems in emerging markets have been limited to certain countries until now, it has not ruled out the possibility of the crisis extending to a larger number of economies.

Source: Evans Chamberlain Asset Management