Wed Dec 26, 2018, 12:45 PM

A silver lining for Chinese stocks

The Trump Administration’s frequent references to the decline in China’s equity market as evidence that America was winning the trade war have come back to haunt it. Uncertainty about the status of global supply chains forces corporations to postpone investment decisions.

If the Trump Administration wants to get the stock market out of its present free fall, it will have to resolve the trade war issue.

The trade moderates in the administration (Treasury Secretary Mnuchin and top economic advisor Kudlow) have a much stronger argument to make on behalf of a deal. If Trump wants to get a vote of confidence from the stock market his most efficient course of action is to pursue a trade deal on the terms discussed in Buenos Aires.

Chinese stocks should be the biggest beneficiary of the turn we expect in US policy.

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