x

Start investing with a
free Kristal.AI account.

icon

Simple. Secure.

*Error message

IC Speaks Mins Read

The Trade War Just Took a Turn Down Currencyville; and It’s Mayhem

kristal.ai-advisory-letter-banner

Advisory Letter: 6th August, 2019

 

Trump tweeted. Trump lashed. Trump levied sanctions and called big tech corp Huawei to the courtroom. Trump hemmed and hawed and made promises of a truce; uneasy as they may have sat on his tongue.

And then Xi made his money move by depreciating the yuan, and Chinese enterprises stopped their purchase of American farm goods.

The score now stands:

Trump: endless tweets. Xi: manipulation par excellence!

Jokes aside, this is not a good place for either of the world’s superpowers to be at. It’s been almost a decade since the last time the renminbi cracked seven. Wall Street obviously didn’t like this, with the S&P 500 sliding down 3%. Trade-sensitive sectors such as technology, consumer discretionary, and the industrial sectors saw the most sell offs. U.S. treasury yields are down as investors move to government-backed bonds, and could continue to fall if China does not rein in the currency weakening. The domino effect has also taken over markets in Asia and Europe. South Korea’s won dropped to its lowest in three years. The yen on the other hand has climbed to 105.80 to the dollar; the strongest it has been since the flash crash in January.

U.S. Treasury 10-Year Yield
U.S. Treasury 10-Year Yield

Xi’s move is pure psychological warfare, but it also allows China to offset the worst effects of Trump’s 10% tariffs. A weaker yuan makes it easier to sell goods abroad, and adversely affects American exporters looking to compete with China.

So, where do we go from here?

People’s Bank of China Governor Yi Gang has already issued a statement to the effect that China won’t use its currency as a ‘weapon’ in this war. Market sentiments seem to be divided on the matter. While Mnuchin is happy calling China a currency manipulator, there is little to actually prove that this is Xi’s doing all alone. Some analysts feel the yuan’s weakening is a natural offshoot of the trade war, and the People’s Bank of China has also claimed it is confident of keeping the renminbi at a stable state.

This is of course not the first time that China has devalued its currency. Back in ‘15, the PBOC knocked off almost 3% off the yuan in three consecutive devaluations. The shock factor this time comes from the fact that the yuan has been very stable for the past decade and investors have grown used to its increasing strength. In the backdrop of the escalating trade war, this is being seen as a power move by the Chinese, and the start of a new Cold War.

If this turns into a protracted currency war, it could spell trouble for many small and medium-sized trade-driven economies. Countries like Vietnam and Bangladesh which rely heavily on their exports and have huge debts will suffer. In the coming days, we could see global economic demand going down which will hurt oil prices, and cause a ripple effect on the other important currencies.

Investment-wise, we could see a reflection of the topsy turvy times in how various strategies perform. Crypto might just come back in the loop, and gold prices might strengthen. At Kristal.AI our house view is that the safe haven right now is in the bond sector and we’re hedging our bets on investment-grade corporate bonds. For investors with a 70:30 bond to equity portfolio allocation, we are maintaining a status quo with the caveat that if needed, we might change over from high-beta to low-beta stocks. For those with a higher equity allocation, we are rebalancing with a strong leaning towards IG bonds.

Also, SIP can be the way to go in such scenarios. For instance, let’s say you set up a standing instruction to build a medium to a long-term portfolio and add $1000-$2000 every month. Lest the market takes a massive dip, you can always add more, say $5000 and once it recovers, you can go back to investing $1000 per month.

If you have any doubts on how to insulate your portfolios from the market upheavals, remember your trusted advisors at Kristal are always a holler away at advisors@kristal.ai. 

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

Other stories you might like

cross
Change your country to India?

You’re now visiting Kristal.AI Worldwide.
To explore diverse offerings in Indian and global products, select India as your country.

ind

India

hkg

Hong Kong

sgp

Singapore

global

Other
Accredited Investor Declaration

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial Institutions, large corporates, high net worth individuals and sophisticated investors.

An Accredited Investor is an individual
  • Whose net personal assets exceed in value SGD 2 million (or it’s equivalent in a foreign currency) with value of his/her primary residence capped at SGD 1 million, or
  • Whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or it’s equivalent in a foreign currency), or
  • Whose income in the preceding 12 months is not less than SGD 300,000 (or it’s equivalent in a foreign currency)

I agree to opt-in as Accredited Investor and will submit required documentation to confirm the same.

< Back Proceed as Private Wealth

Wealth Management Solutions
Accredited Investor Declaration

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial Institutions, large corporates, high net worth individuals and sophisticated investors.

An Accredited Investor is an individual
  • Whose net personal assets exceed in value SGD 2 million (or it’s equivalent in a foreign currency) with value of his/her primary residence capped at SGD 1 million, or
  • Whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or it’s equivalent in a foreign currency), or
  • Whose income in the preceding 12 months is not less than SGD 300,000 (or it’s equivalent in a foreign currency)

I agree to opt-in as Accredited Investor and will submit required documentation to confirm the same.

Proceed as Private Wealth

STOCKS

Seamless investing enabled by easy and instant access to a wide range of cross border stocks of acclaimed and high potential companies, handpicked by our expert investment committee.

For investors who desire enhanced returns while co-owning shares of global companies.

*The range of stocks will be made accessible, post login

OVERVIEW

Only the best

A range top performing and high potential stocks carefully selected by our seasoned investment committee

Instant Access

Wide range of global stocks made easily accessible with a single click

Diversity

Companies from varied sectors and fields made available for investment enabling clients to diversify investments and effectively mitigate risks

Innovative

High potential companies leading with disruptive technologies made available to clients enabling them to future proof their investments

THEMATIC STRATEGIES

Enabling clients to invest in trending themes like FAMANGThe FAMANG Kristal invests in Facebook, Apple, Amazon, Netflix and Alphabet’s Google stocks. Assets are carefully chosen by an algorithm in order to deliver a superior returns based on past performance. The strategy is rebalanced every quarter., TECHGlobal Technology ETFs is a genetic algorithmic strategy focussed specifically on the Technology sector., ESGProvides exposure to higher rated environmental, social, and governance (ESG) companies while accessing large- and mid-cap stocks in Europe, Australia, Asia and the Far East., etc. with a single click or just create your own thematic basket.

Future-proof your portfolio and capture emerging investment themes.

*The range of Thematic Strategies will be made accessible, post login

OVERVIEW

Explore and Identify

Select from a range of expertly designed trending and diverse themes

Efficient Execution

Enabling easy exposure to your preferred themes without the hassle and costs of individual security selection and execution

Only the Best

A ready-made collection of Kristals that derive the best of the specific asset class or theme

Unique Mix

An optimised blend of ETFs and individual counters, enhancing efficiency and profitability

Contact our Relationship Manager
ALTERNATIVE INVESTMENTS

Diversify your portfolio with exclusive Private Equity, Pre-IPO deals, VC Funds & other investments like Bitcoin, Gold, Hedge Funds and many more.

Kristal fractionalizes difficult-to-access deals and opportunities.

View Alternative Investments

OVERVIEW

Instant Access

A wide range of alternative asset classes such as Gold, Bitcoins, Hedge Funds and many more; readily made available

Risk Management

Enables investments in diversified assets hence spreading the risk

Easy Tracking

Enables you to get a consolidated view of investments in all assets at one place, hence facilitating easy monitoring and tracking

Exclusive Deals

Access to exclusive Venture Capitalist, Startup as well as pre-IPO investment opportunities

Low Investment Tickets

Facilitates fractionalization of investments in deals

Contact our Relationship Manager
FUNDS PLATFORM

Professionally managed funds with active investment strategies, screened for you by our investment committee to diversify your portfolio.

Enabling clients to access exclusive investment strategies.

View Funds

View Funds

OVERVIEW

Access

Provides Access to Professional Fund Managers

Low Investment Tickets

Facilitates fractionalization of investments in funds

Diversity

A wide spectrum of investment strategies ranging from Arbitrage to Credit to Hedge Funds and many more

Fees

No additional costs are charged by Kristal.AI

Exceptional Performance

Funds with an impressive track record and potential for high profitability

Leverage

Benefits from insights of the expert selection and advisory team

Easy Management

No time consuming management of portfolios

Contact our Relationship Manager
TAILOR-MADE PRODUCTS

Customize products based on your market outlook and specific needs across equities, bonds, gold and more.

For investors looking to enhance portfolio yield based on market views.

*The range of Tailor Made Products will be made accessible, post login

OVERVIEW

Enhanced Earnings

Structures with potential to enhance portfolio yield based on market movements

Customization

Product features can be designed to articulate investor views

Fees

A flat and transparent fee structure like nowhere else

One-Click Access

A single feature ‘Ideas’ enables you to access recently launched and trending market opportunities

Contact our Relationship Manager
BUILD YOUR OWN KRISTAL

Can’t find what you are looking for? Create your own exclusive investment strategy with risk management & periodic reporting.

For seasoned investors who prefer to design their own portfolio.

OVERVIEW

Empowered Investing

Enables clients to create their own custom portfolio based on their unique needs

Unlimited Choice

Access to all possible exchange traded assets

Flexible Management

Flexibility in delegating the portfolio management role to us or actively taking up the day to day investment decisions, in your custom Kristal

Custom Fee Structure

A simple, transparent and a customized fee structure

Access to Expertise

Custom performance reporting as well as advisory support

Contact our Relationship Manager