How must the savvy investor prepare, if the world turns bipolar and splits into economic halves around US and China by 2030?

Owning both US, Chinese assets would led to a “more robust portfolio” in the future, Julius Baer’s Yves Bonzon said

Trade war could accelerate acceptance of yuan as a global reserve currency

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A US flag on an embassy car is seen outside a hotel in Shanghai on July 31, 2019. Photo: Reuters

Published: 5:00pm, 10 Oct 2019Updated: 10:18pm, 10 Oct 2019

The world could be moving to a bifurcated economic system centred around the United States and China – including separate capital markets – within the next decade, according to Yves Bonzon, the chief investment officer of Swiss private bank Julius Baer.

The Trump administration has reportedly been discussing limiting financial investments between the two countries and a potential delisting of Chinese companies on US stock exchanges until Beijing agrees to reforms, a concept raised by former Trump adviser Steve Bannon earlier this year.

The US Treasury denied last week there were plans to stop Chinese companies from listing in the US, a denial that was echoed by Trump’s chief economic adviser Larry Kudlow who said on Tuesday that delisting of Chinese firms was “not on the table”. Kudlow said the administration was instead exploring protections for US investors in China.

The ongoing trade war between the two countries could result in a “bipolar world” by 2030 with decoupled Chinese and US economic and financial cycles, as well as separate technology ecosystems, Bonzon said.

A portrait of Yves Bonzon of Julius Baer. Photo: Handout

“The fundamental beta of the two markets will therefore be independent,” Bonzon said. “This will be the greater return of international diversification. Owning both China and US assets will led to a more robust portfolio than holding one or the other.”