How to model a trade war - just in case...
The trade war between China and the US has been the single most important driver of financial market performance in the past three years, and despite the recent optimism that a “phase one” deal is within reach, there is still a distinct possibility for it to fall apart at the last minute. Similarly, the tariff decision on EU car imports has only been put on hold for another six months, keeping the threat alive for future use. This paper shows how stress tests can be used to identify potential vulnerabilities and unwanted exposures in portfolios, and also points out strategies for diversification and loss-minimization.
||Christoph V. Schon, CFA, CIPM
Executive Director, Applied Research
© 2020 Qontigo GmbH