Coronavirus impact on markets could outweigh U.S.-China tensions in the near term


The economic impact of the coronavirus is bigger for markets than bilateral tensions between the United States and China, a portfolio manager said on Friday.Relations between the world’s two largest economies have taken a dramatic turn for the worse since Wednesday, when the United States ordered the closure of a Chinese consulate in Houston.

But, the increased tensions are “not a huge surprise; we’ve seen this kind of sentiment dip for a few months now, ”said Sat Duhra, portfolio manager of the Asia dividend income strategy at Janus Henderson Investors. He said he expects more of that rhetoric ahead of the US presidential election in November.

Duhra made his comments before China ordered the United States to shut down its consulate in Chengdu.

“What will really have more impact on the markets will be the response to the virus, I think it has a much bigger economic impact in the short term than anything we hear on both sides of this (political) issue,” he said. Duhra told CNBC. »Street Signs Asia. ”

Still, Janus Henderson Investors kept the current tensions between the US and China in mind while choosing investments.

“Since we saw the start of this so-called trade war, we’ve been very careful not to own any Chinese exporters, or Chinese industrialists, energy, those kinds of companies,” Duhra said.

But companies that supply China’s domestic market are doing well, he said, without naming specific companies.

“Since the start of the trade war, you have seen the names of domestic consumption and national infrastructure work very well. These are the kind of names we hold, we still believe they will be successful even in this kind of environment, ”he added. .

As the Chinese government leads a movement toward self-sufficiency, such companies will do well even amid political tensions with the United States, he said.

“At the end of the day, if you buy companies that sell Chinese products and services that are made by the Chinese, for the Chinese, then they behave very differently,” he said.


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