A $210 Billion Manager Says Market Is Too Jumpy About Trade War
(Bloomberg) -- For all the trade bluster between the U.S. and China, Naoki Kamiyama’s still less worried about the impact of protectionism on his firm’s stock investments than he was when Donald Trump was elected.
The chief strategist at Nikko Asset Management Co. in Tokyo says the planned tariffs that the countries announced this week -- each on $50 billion of imports -- will have minimal impact on the global economy. Not only that, those levels are open to negotiation, he says.
Kamiyama, who spends his days watching Japanese shares at the more than $210 billion fund manager, is more bullish on equities now than when Trump swept to power in 2016. That’s because -- despite the campaign rhetoric, and this week’s developments -- U.S. policies have been more "reasonable" than he initially expected, he said.
“It’s not really a big war,” Kamiyama said in a phone interview. “I think we can be much more optimistic."
Stocks have been whipsawed by the back-and-forth between the world’s two biggest economies, and volatility remains elevated. Shares sank in the Asian afternoon on Wednesday as China responded with its own set of tariff plans, before recouping all those losses by the U.S. close on optimism that Trump would be willing to negotiate.
U.S. Commerce Secretary Wilbur Ross said Wednesday that China’s response isn’t expected to disrupt the U.S. economy. In an interview on CNBC, he said China’s reaction “shouldn’t surprise anyone” and the U.S. isn’t entering “World War III.”
Kamiyama notes that the U.S. tariffs are still small compared to total imports from China, which came to $433 billion in 2017, according to Chinese data. And they generally avoid consumer goods, which means they’re less likely to hurt spending in the world’s biggest economy and impact global growth, he said.
“It’s only more or less 10 percent of overall imports from China,” Kamiyama said. And “if they were to tariff general necessities from China, it must be supported by Congress. That’s much more difficult.”
Trump has no incentive to make matters worse ahead of the midterm elections in November, Kamiyama said. He predicts that negotiations between the two countries will be much more positive than the market expects.
If the size and scale of tariffs “expands and becomes quite clearly impactful on GDP growth for 2018 and 2019, it can be called a war,” Kamiyama said. But “I don’t think it’s coming.”
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