The anxious pandemic times seem to get over but the pre-pandemic tension between the global economic powers seems to build up again. The United States is talking about the banning of Chinese companies once again and this would lead to another trade war most likely.
Markets have experienced such volatility this year that the mindset of investors is shaken quite a great deal. Even the price of oil falling negatively has made everyone aware that political players can go any limit to propagate their motives. Global community also experienced quite an uncertainty in terms of their job security and traditional businesses were found guessing too in these times.
While everyone was looking to get things to get normalized, this fresh wave of the trade war has put the investors on hold for an uncertain period. Many are looking to diversify their investments to new markets and platforms where external factors have minimum impact. Online and digital trading is thriving in this modern era and the usage of best trading apps in the UK has increased exponentially.
Markets have been experiencing quite a turmoil and the post-pandemic situation doesn’t seem to get better. Let’s evaluate some of the impacts and what trade wars truly means for the investment markets:
The global economy gets weakened
The sad part of the story when there is an imposition of tariffs and protectionist policies, it becomes difficult for corporations to operate globally. They pull out their investments from the countries where they don’t find friendly circumstances. The global expansion is all about profit-making, so if that does not exist, then you can expect this thing to happen.
Investments seem to get localized
While we all fancy about buying shares of the global corporations that we can brag about, this gets to reduce dramatically. Local shares buying and stock markets would be the only left out option for the investors when big corporations aren’t presenting any viable investment opportunity. When they aren’t looking to expand, they won’t be needing any further capital, thus causing the global economy to slow down.
Startups are on the rise
With powerful ecosystems and increased entrepreneurship awareness, while market gaps are left unfulfilled by the big players, startups have this opportunity for themselves. Also, there is a change in lifestyle too where home-focused products and services were largely consumed. The online entertainment industry also presents viable growth opportunities at this time since people are spending more time within their homes.
Less focus on tech companies
The main victims of the trade wars have been tech companies. They are primarily accused to access sensitive customer data and are termed as a risk to the national security of the respective countries. Investors would be focusing much less on making investments in these kinds of companies where they present quite an uncertainty and volatility due to political differences.
While we all hope that this does not continue for long as we’ve come too far and it was the right time to achieve global harmony due to globalization. Markets and economies are the first things to get affected when any uncertain situation arises so everyone seeks the situation to calm down as soon as possible.