Tech stocks to consider after China-US truce

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Since Donald Trump’s election victory in 2016, the two biggest storylines in the investment world have been tech stock supremacy on Wall Street and the U.S. trade war with China.

The tech-tariff saga isn’t fading from the headlines anytime soon, creating opportunities and risks for investors who bet tech will retain its No. 1 performance ranking.

The bullish narrative is that the “Phase One” trade deal sealed between the United States and China late last year signals a thaw in their chilly relationship, eliminating some of the uncertainty in markets and giving a lift to the global growth outlook. The prospect of trade barriers falling, less theft of U.S. tech firms’ intellectual property and an opening of China’s market are all positive drivers for tech firms’ sales and growth.

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“If Chinese competitors can’t rip off or make the same products (as the U.S. firms), I think that would be a positive on profit margins longer-term,” said Matt Sabel, manager of MFS Technology Fund.

The trade disagreements won’t disappear overnight. The Phase Two and Phase Three deals, which will tackle more complicated issues, such as forced tech transfers and emerging technologies such as AI, quantum computing and the 5G network that affect each nation’s economic future and national security, have yet to be fully negotiated.


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