Amid Trade Barriers, I Would Seek Shelter in U.S. and Chinese Tech Stocks

Nikolay Stoykov, Managing Partner at Alaric Securities on “Business Start”, BloombergTV Bulgaria

In the context of a trade war, I see American and Chinese technology stocks as safe-haven assets rather than short positions. I suggest buyers to look for economies that are performing well and have relatively high growth. Predictions of a second Great Depression are exaggerated. I deeply doubt that Mr. Trump is entirely stable in his policies. The aggressiveness in his words is part of a strategy to push partners toward change. There are many agreements between them that are not being upheld, and the American president approaches the situation like a New Yorker with a big bell.

This was stated by Nikolay Stoykov, Managing Partner at Alaric Securities, on the program Business Start with host Hristo Nikolov.

Tariffs and Their Impact on Key Industries

China, Canada, and Mexico are the three most important partners of the U.S. However, according to the guest, the delay in imposing tariffs on the EU suggests that Trump wants to observe the initial effects of tariff policies. The president is not imposing tariffs on all partners at once, as he seeks feedback from the initial measures. Mr. Stoykov believes that it is only a matter of time before the entire policy becomes clearer.

This is an initial deal, and long-term decisions will take some time. It is still too early for reassessments.

In recent months, there has been a significant increase in trade between the U.S. and Canada and between the U.S. and Mexico. Tariffs are having a serious impact on Canadian automotive exports, Mexican agricultural products, and brewing industries.

The tariffs were expected, and many manufacturers and traders have stocked up their warehouses. When February 4 arrives, I don’t think beer and avocados will run out. However, if tariffs remain in place in this manner, it could lead to increased inflation in the U.S.

“The economies of Canada and Mexico will not be catastrophically affected by the tariffs,” Stoykov firmly stated. He explained that an entire industry in Canada and Mexico will emerge to bypass tariffs, but there will also be companies that will be heavily impacted and unable to recover. Nevertheless, he expects that some goods will be exempt from tariffs, while others will have reduced rates. He recommends seeking a diversified portfolio in these two countries.

Can the U.S. Trade Deficit Really Be Reduced

The guest also noted that the market expects some improvement in the U.S. trade balance, but it is unrealistic to expect a massive shift since U.S. infrastructure does not allow the affected industries to relocate there easily.

“The potential to reduce the U.S. trade deficit is very small. A more realistic outcome is that imbalances with some countries may decrease, but with others, they will increase.”

Watch the full commentary in the video.

Source: BloombergTV Bulgaria