Since February 2018, Donald Trump and Xi Jinping have been trading threats of imposing tariffs against each other’s economies. As a risk-conservative option in this environment, we suggest investing in the Japanese domestic market: instead of looking for U.S. or Chinese investment alternatives and betting on whether a trade war will materialize, investing in Japanese home market stock in this environment will function as a viable long-term value growth option, while also capturing positive effects should the neighbors start to move toward protectionism. Since Japan is recovering from the contraction of its economy in the early 2010’s and the economy is often considered a safe harbor investment due to its stability and risk averse reputation. Therefore investing in Japanese domestic facing business will yield reliable return which will be protected or even bolstered in case of a trade war.

Analysts: Jonathan Angestjärna (BSc Economics), Panu Pikkanen (MSc Accounting and Finance)

SafeHarbor.20180415.vF