Following on from the previous article sent on the weekend, I thought it would be helpful to provide a further update and commentary as global investment markets search for a level of normalisation.
As last discussed, our investment team are actively managing cash levels to both manage risks and identify opportunities. Our focus on large strong balance sheet companies (shares and bonds), overweight positions in cash and gold, plus proactive risk-management will continue to hold client portfolios in good stead. Our client portfolios continue to generate positive investment cashflow and will be in a strong position to take advantage of the inevitable recovery in local and global markets.
Brief investment market update
The following is a summary of key market movements over the last five days.
Key market activity:
- US and local market volatility creating more records – not necessarily all bad.
- Active trading as traders are trying to speculate when markets will bottom. Trading volumes hit their highest levels in 18 years.
- A strong local market recovery yesterday has petered out somewhat today with two hours of trading remaining.
- The record turnarounds on volume helps to indicate an element of bargain hunting appearing.
- Apple eyes India for iPhone production (tariff policy starting to have an effect)
- The impact of reciprocal tariffs is estimated to raise the price of Apple’s China produced iPhone 16 Pro Max by as much as $350 in the US. This would reduce to a $120 increase if produced in India.
- Apple has 90% its manufacturing based in China so is one of the most exposed companies in the trade war. China has a potential incoming 54% tariff rate – before new retaliatory increases were mentioned last night.
- It is estimated that Apple will need to increase prices on average 30% to offset import duties fully, but it’s still early days and these estimates don’t take into account potential exemptions.
- Tariff negotiations begin
- Japan, South Korea, Vietnam and Israel are all said to be in active negotiations with the US administration over tariff policies.
Once the panic subsides, investors may start to consider …
Disruption yes, long-term doom and gloom, no.
In fact, these measures have a good chance of leading to:
We will see where the opportunities lie in the days/months to come.
Macro insights into the US administrations foreign policy setting
The following charts provide insights into the motivations for the current US administration foreign policy and security stance.
