Skip to main content

Market Overview

Pro Investor Says Market Isn't Pricing In China Risks

Pro Investor Says Market Isn't Pricing In China Risks

Tensions between the U.S. and China has been "bubbling up" over the past few weeks and represents a new set of risks that aren't priced into the market at current levels, Wilmington Trust head of investment strategy Meghan Shue said on CNBC's "Trading Nation."

What Happened

At a time when the U.S. is slowly starting to reopen itself for business, the economy needs to deal with a potential trade headwind with China. Escalating tensions are something Shue said she worries about, especially as the market is pricing in a "pretty robust" V-shaped recovery.

Most recently, U.S. President Donald Trump said he will look at ways of revoking Hong Kong's special treatment.

Beyond the president, there is a general sentiment that there is "not much room on the political stage for anyone that is seen as going soft on China," Shue said. 

"We think the tension with China is going to ramp up."

Why It's Important

Despite clear warning signs, the market isn't as concerned as it should be, she said. 

"The market is priced pretty much to perfection right now. A lot has to go right," Shue said.

"Any misstep on a number of fronts, whether it's to the vaccines or businesses that are not able to reopen as many anticipate — that would be reason for the market to give back some of these gains."

What's Next

Even if all of the recent gains are erased, investors with a time horizon of at least one year shouldn't panic, Shue said. But it does mean investors need to be diversified and understand the market won't "go up in a straight line," she said. 

"The market needs to be pricing in a little bit more of that downside risk for me to get really excited about stocks at the moment," Shue concluded.

Related Links:

House Republicans To Introduce Bill Banning Investments In China-Linked Foreign Defense Companies

4 Key Takeaways From Trump's China Presser: Hong Kong, WHO And More


Related Articles (SPY)

View Comments and Join the Discussion!

Posted-In: China CNBC Donald TrumpNews Politics Global Media General Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at