U.S.-China tensions don’t eliminate opportunities for investors, says sovereign wealth CEO

SINGAPORE — Investors should not be “too bearish” about the markets even if tensions between the U.S. and China continue to rise, the chief executive of South Korea’s sovereign wealth fund said this week.That’s in part because relations are unlikely to shift in the near term, said Choi Heenam of Korea Investment Corporation.”The U.S.-China dispute isn’t just political,” he told CNBC’s Tanvir Gill on the first day of the Singapore Summit. “It’s a hegemonic conflict based on structural problems rather than political interest.””I think it will continue to be an overhang for the global economy, but ultimately, not destructive,” he said on Monday.As the natural result of the pandemic crisis, more countries … tend to concentrate on national interest rather than global interest. That means tech nationalism is going to be intensified. That is very bad news for companies.Choi HeenamKorea Investment CorporationHe said he doesn’t see U.S. hawkishness toward China changing much after the presidential elections in November because there is bipartisan support for Washington’s current policy toward Beijing.”With that in mind, we don’t need to be too bearish about the market, even if tensions between the two countries escalate. Instead, we need to take advantage of the ‘risk-off’ mode in the market, if there is any.”A risk-off scenario is when investors are less tolerant to risks and sell off assets, pushing down prices.Tech nationalismChoi also weighed in on the rise of protectionism and said it would “definitely hinder” the development of new technologies.”As the natural result of the pandemic crisis, more countries … tend to concentrate on national interest rather than global interest,” he said. “That means tech nationalism is going to be intensified. That is very bad news for companies.”In addition to their trade dispute, the U.S. and China have also been locked in a technology war, with Washington putting pressure on Chinese technology firms.The U.S. is trying to stop Chinese firms, such as smartphone maker Huawei, from purchasing important components. The U.S. Department of Defense said this month it may blacklist Semiconductor Manufacturing International Corporation, China’s largest manufacturer of semiconductors.Choi said Korea Investment Corporation tends to invest more in American technology firms, but acknowledged that there’s “obvious competitive advantage” for some Chinese companies. KIC needs to strike the right balance between both countries, but “destructive” forces can cause companies to lose their competitive edge, he said. “That’s going to hinder our investment interest,” he said. “My concern is really on that issue, so my hope is that everything is going to be solved peacefully and easily.”

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