Top Investment Banks: How to Reduce the Impact of Tariffs?
Trump's tariff policies have had significant impacts on the secondary market.
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https://money.com/
Top investment banks have provided the following advice for investors in the secondary market:
1. Diversify Investment Portfolios
Mitigate Market Volatility: $JPMorgan Chase(JPM)$ Asset Management believes that Trump's tariff policies have brought greater short-term pressure on risk assets, and diversifying investment portfolios can help mitigate market turbulence.
Focus on Relatively Safe Markets: J.P. Morgan suggests that investors should focus on economies such as Australia, the UK, Brazil, and Singapore, which face relatively smaller tariff increases.
Include Bonds: Bonds can provide stability and act as a hedge against stock market volatility. High-quality short-term bonds and higher-yielding “plus” sector bonds are recommended. In times of economic uncertainty, bonds may offer more stability compared to equities.
2. Adjust Industry Allocations
Service Sector Safety: Increasing tariffs typically have a lesser impact on the service sector than on goods industries. Financial $Financial Select Sector SPDR Fund(XLF)$ , healthcare $Health Care Select Sector SPDR Fund(XLV)$ , and consumer services companies $Consumer Staples Select Sector SPDR Fund(XLP)$ are likely to experience less pressure on profit margins.
Go Long on Defensive Sectors: J.P. Morgan recommends going long on energy $Energy Select Sector SPDR Fund(XLE)$ and utility stocks $Utilities Select Sector SPDR Fund(XLU)$ (excluding AI-related ones) and shorting low-yield consumer discretionary and high-beta TMT sectors.
Gold and Mining: $UBS Group AG(UBS)$ is bullish on gold and mining stocks for 2025. Gold, as a safe-haven asset, performs well amid the market uncertainties caused by tariff policies.
3. Pay Attention to Safe-Haven Assets
Gold and Precious Metals: Due to the market uncertainties caused by tariff policies, gold and other precious metals have become the top choice for safe-haven assets. Investors can focus on gold ETFs (such as $SPDR Gold Shares(GLD)$ ) and gold producers (such as $Barrick Gold Corp(GOLD)$ , $Newmont Corporation(NEMCL)$ ).
Government Bonds: J.P. Morgan Asset Management believes that government bonds may attract inflows of safe-haven funds.
4. Be Cautious with Sectors Heavily Affected by Tariffs
Technology Stocks: The complex global supply chains of the technology sector make it highly vulnerable to tariff policies. Stocks like $Apple(AAPL)$ and $Tesla Motors(TSLA)$ have seen significant declines following the announcement of tariff policies.
Automotive and Manufacturing: A 25% tariff on cars exported to the US has a significant impact on automobile manufacturers and related parts companies.
Emerging Markets: Emerging markets in Southeast Asia, for example, may be hit by capital outflows.
5. Monitor Policy Dynamics and Negotiation Progress
Trade Negotiations: Investors need to closely monitor the progress of trade negotiations between the US and other countries. The outcomes of these negotiations will directly affect the implementation of tariff policies and the market's response.
Domestic Policy Support: In the Chinese market, despite facing tariff pressures, government fiscal stimulus policies and industrial upgrading may provide support for the market.
6. Maintain a Long-Term Investment Perspective
Short-Term Volatility vs. Long-Term Trends: Although Trump's tariff policies have intensified short-term market volatility, the policy flexibility, industrial chain resilience, and valuation advantages of economies like China constitute a "triple buffer" against market shocks. Investors should focus on long-term trends.
In summary, investors should remain cautious, flexibly adjust their investment portfolios, focus on safe-haven assets, and closely monitor policy dynamics to cope with the uncertainties brought by Trump's tariff policies.
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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