Brazil, others may gain ground as U.S.-China trade battle escalates: Geoff Dennis

Amid heightened global uncertainty and an absence of concrete trade deals, it is believed that markets relatively insulated from tariff retaliation may offer better opportunities in the current environment. Geoff Dennis, an Independent EM Commentator, in a recent interaction with ET Now, said investors should consider focusing on countries and stocks that are less exposed to the fallout of the U.S.-China trade conflict.

In the current environment, Dennis pointed to countries that are not caught in the direct crossfire of U.S.-China tariffs as more favorable investment destinations.

“The best bet at the moment, as I say is to favour stocks and countries that are not going to be hit by reciprocal tariffs,” he stated. To support his view, he cited an example: “I mean 10% on Brazilian exports to the US versus 145, I should say for Chinese exports into the US—that is the kind of a no-brainer frankly.”

Dennis added that several third countries could benefit from trade rerouting. “A lot of these third countries are going to pick up market share in China because the US is going to be unable to sell some of their goods into China,” he said.

He noted that the steady flow of unpredictable announcements from the White House has made it difficult to gauge when markets might stabilize.

“It is very-very hard to tell and you simply have to play it day by day, week by week according to what happens with these talks,” Dennis said, adding that valuation clarity will only emerge once trade agreements are in place.He noted that the market continues to be influenced by a flood of commentary and announcements out of the White House, making it difficult for investors and analysts to arrive at a stable valuation for stocks, currencies, or broader markets.Also read: Why bonds belong to every Indian investor’s portfolio—and why now is the ideal time to invest

With this outlook, Dennis acknowledged that the broader trade picture is far from resolution.

“We have not even had one trade deal yet. These trade deals are hard to negotiate,” he pointed out, indicating that markets may continue to face volatility in the near term.

He estimated that sometime in the second half of this year, there may be more stability in the tariff situation, which could allow analysts and investors to re-evaluate fair valuations.

Until then, Dennis anticipates signs of recession in the US, weak growth, which may continue to weigh on market sentiment.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)