As a result of Trump's tsunami of import tariffs, no major financial institutions have yet run into problems. Nevertheless, as an investor, it is important to constantly stay on top of things, says APG chief economist Thijs Knaap during the investor panel of the radio program ‘BNR Zakendoen’.
How does a long-term investor like APG deal with the turmoil that Trump has caused in financial markets worldwide? How wise is it to hedge the dollar risk on your investments in the US? Which companies are most at risk as a result of Trump's tsunami of import tariffs? Knaap addresses these questions, among others.
Strong balance sheets
Asked about the risk of a dynamic in which a major party collapses and a more structural financial crisis occurs, Knaap says: "If a large bank, hedge fund or investor gets into trouble and there is a domino of bad risks that are passed on, it can eventually cause a total financial crisis. However, we don't have that yet. We have seen major market movements, but no major financial institutions have yet run into problems. The balance sheets are generally quite strong. It may take some time for those losses due to a trade war to materialize and for the problems to materialize. So as an investor, you have to stay with it all the time, but for the time being it seems to be okay."
China
How this ultimately works out will also depend on whether Trump retraces his steps. Knaap: "Are the opposing forces – politics, the judiciary and countries that are affected and taking countermeasures such as China – going to change the American president's mind? There is constant uncertainty about that."