Welcome to Saxo Bank Hong Kong

Please select your language
Equities 4 minutes to read

How to prepare for an all-out trade war

Peter Garnry

Head of Equity Strategy

Summary:  Tensions between the US and China continue to rise, with investors realising that they will likely need to prepare for a bitter, drawn-out conflict. Here are the key equities and ETFs to watch for trade war exposure as Washington and Beijing prepare their next moves.


(UPDATE: Saxo has enabled CFD trading across most of the assets listed below, with the exception of EXV5:xetr. This allows investors to express a bearish view via shorting the instrument.)

The China-US trade war is growing more severe with every day that passes. Reports of US companies experiencing increasing friction in China are emerging as Beijing retaliates against Washington's latest tariffs and regulatory strikes. This morning, the BBC reported that ARM Holdings employees have been asked to halt “all active contracts” with Huawei to remain in compliance with the US ban on that firm; the Financial Times, meanwhile, stated thius morning that US companies are responding to tariffs and the current trade war trajectory by moving production out of China.

We are witnessing a massive reconfiguration of the global supply chain and most investors are not mentally prepared for the outcome. We remain significantly more negative than consensus on the trade war. Our latest analyses on the developing Cold War in tech as well as on semiconductors' centrality to the conflict aim to provide some clarity on what is a very fluid and fast-moving situation.

Assets caught in the crosshairs

The below list details the stocks and exchange-traded funds most exposed to the trade war. They track semiconductors, the automotive sector, Chinese tech, inustrials, and transportation.

These assets are likely to endure significant volatility as the trade war progresses. It is crucial, in our view, that investors are aware of the dynamics facing these assets and sectors so they can allocate accordingly in what appears to be the start of a major market disruption.

Semiconductors / technology

iShares TecDAX UCITS ETF (EXS2:xetr)

• This tracks German technology and contains some semiconductors such as Infineon Technologies
• This index can also be traded as a CFD and a future

Invesco QQQ Trust Series 1 (QQQ:xnas)

• Tracks the Nasdaq 100 Index – the leading US technology index
• Not UCITS and thus not available to European retail investors
• This index can also be traded via CFD, futures and options

iShares PHLX Semiconductor ETF (SOXX:xnas)

• Tracks the PHLX Semiconductor Sector Index
• Not UCITS and thus not available to European retail investors
• Can also be traded as CFD

Automobiles/transportation

iShares STOXX Europe 600 Automobiles & Parts ETF UCITS (EXV5:xetr)

• Tracks the STOXX Europe 600 Automobiles & Parts Index
• Can also be traded as a CFD

SPDR S&P Transportation ETF (XTN:arcx)

• Tracks the S&P Transportation Select Industry Index
• Not UCITS and thus not available to European retail investors

Chinese technology

KraneShares CSI China Internet Fund (KWEB:arcx)

• Tracks the CSI Overseas China Internet Index
• Not UCITS and thus not available to European retail investors

Chinese technology, auto, E-commerce, semiconductors (single stocks – US ADRs, HK stocks)

 • Alibaba• NetEase • Autohome • Bilibili • Tencent • BYD 
 • Baidu• iQIYI • 58.com • HUYA • Meituan Dianping • Geely Automobile 
 • JD.com• Weibo • Momo • NIO • Xiaomi • Sunny Optical Technology 
 • Lenovo Group     
Single semiconductor stocks

Our analysis of the global semiconductor industry showed two custom-made indices tracking the industry. Below are the constituents of these indices (this is useful for European retail investors not able to trade US-listed ETFs).
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
Rooms 2001-02, 20/F York House
The Landmark
15 Queen's Road Central
Hong Kong

Hong Kong

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061). Registered address: Rooms 2001-02, 20/F York House, The Landmark, 15 Queen's Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.