The duelling threats to US, China technology stocks

THE drumbeat of US-China tensions is likely to crescendo in the coming months, with the relationship devolving across geopolitical, diplomatic and economic fronts. However, any disruption over coming months could provide pockets of opportunity in Chinese technology stocks, which enjoy supportive underlying trends that include a deep, captive domestic base and a government committed to the development of technology champions as well as macroeconomic stability.

We believe that US-China tech decoupling is a longer-term story, and the prospect of an abrupt fracturing in this relationship does not appear imminent.

Nonetheless, a degree of portfolio protection is also prudent in light of the growing rifts between the world's two largest economies in the coming months. As such, we remain long the US dollar relative to cyclical Asian currencies, like the Taiwanese dollar and Korean won, which would likely come under acute pressure should tensions between the two sides - trade or otherwise - flare up.