YOU know about the losers. A trade war's on, and everything from technology stocks to credit is being strafed. So what's holding on? Safety currencies. Government bonds. Stocks that act like bonds.
"In terms of asset classes, havens, particularly the yen, is the clear draw here. Otherwise, yield-sensitive defensive sectors make for a strong case," said Jingyi Pan, a market strategist with IG Asia Pte.
Winners stand out in markets engulfed in red. Asian equities from Tokyo to Hong Kong are tumbling after the S&P 500 dropped the most in six weeks. An exchange-traded fund tracking US junk bonds slid the most in three weeks on Thursday.
Here's a look at the assets on the winning end of the trade war so far.
The usual suspects
Traditional havens are all rallying, led by the yen, with analysts now speculating the currency could return to highs not seen since Mr Trump was elected. The yen firmed to as strong as 104.64 per dollar, its strongest level since November 2016. Gold rose as much as 0.9 per cent to US$1,344.80, set for the second-best week of the year. US Treasuries rose, with yields on the 10-year note slipping below 2.80 at one point.
"The dollar-yen rate may have entered a fresh downward phase," said Kengo Suzuki, chief currency strategist at Mizuho Securities Co in Tokyo. "The greenback could accelerate declines as the market factors in the trade tensions."
Japanese bonds
Japanese bonds, with yields controlled by the Bank of Japan, are getting bought. The 10-year benchmark yield slipped 1 basis point to 0.025 per cent, the lowest since November 2017. It may drop to zero as local investors decide to park their money in the bonds, according to Eiichiro Miura, general manager of the fixed-income investment department at Nissay Asset Management Corp.
Australian dollar
Australia stands to benefit from both sides of the trade spat as its exemption from US tariffs, as well as the potential for its goods to be a replacement for US products into China, are both giving the country's currency a boost. The Australian dollar rose as much as 0.4 per cent to 77.23 US cents. Still, with Australia relying on China for more than a third of its exports, any drop in commodities demand as a result of deteriorating global trade could override any benefits for the Australian dollar.
China agriculture
Seed producers and pig breeders are jumping in mainland China trading as the government's reciprocal tariffs on the US included fruits, nuts and pork. That will make imports less competitive in the domestic market, according to Zhang Gang, Central China Securities analyst in Shanghai.
Seed producers Gansu Dunhuang Seed Co, Hefei Fengle Seed Co and pig farm operator Hunan New Wellful Co all hit the 10 per cent daily limit increase. Shandong Denghai Seeds Co, Heilongjiang Agriculture Co, Muyuan Foodstuff Co also advance.
Not everything in the S&P 500 declined on Thursday (though it was close): investors moved towards more defensive, yield-sensitive industries. Electric utilities rose 0.7 per cent for the biggest industry gainer in the benchmark, led by increases in PG&E Corp, Edison International and FirstEnergy Corp. Specialised Reits added 0.3 per cent, led by Equinix Inc and SBA Communications Corp.
US tobacco
Maybe rising volatility will spur smoke breaks for nervous traders? In any event, the S&P 500 tobacco "index", comprising two stocks that make up Philip Morris's domestic and international operations, added 0.2 per cent on Thursday, no doubt helped by dividend yields that are twice the broader market. Altria Group Inc and Philip Morris also raised cigarette prices ahead of industry estimates, with the conglomerate enjoying "tremendous pricing power", according to analysts, giving it an additional boost.
International relations
There's a silver lining in all the trade drama, according to Mark Haefele, global chief investment officer with UBS Wealth Management. "The US position could be seen as analogous to a supermarket offering price-match guarantees," Mr Haefele said in a March 22 note.
Such guarantees warn off competitors from slashing their prices as they would be matched, leading to lower profits for everyone. Concurrently, US trading partners would gain no benefit from tariffs on US goods as they will be matched, so they might improve relations in other ways: Europe may agree to pay for a larger percentage of Nato or China could offer better intellectual property rights protections, Mr Haefele said. BLOOMBERG
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