This week’s edition looks at the temporary undoing of the US-China trade agreement, India’s potential regulatory boost for co-investment vehicles, and venture capital’s move to adopt a private equity investing style.
US-China trade respite
Although the 90-day tariff truce announced on May 12 by the world’s two biggest economies appears to be a significant de-escalation of the trade war, private market investors are in no rush to make any material changes to their strategies in the absence of a lasting deal.
LPs have already placed a greater emphasis on “global diversification” in recent years of geopolitical and macro market uncertainties. This desire to mitigate risks by allocating capital across different geographies is unlikely to shift despite the tariff climbdown. Before the full impact of tariffs plays out, investors in Greater China and other Asian markets are likely to remain on the sidelines awaiting more clarity from the ongoing US-China talks and other bilateral trade negotiations.
On a positive note, the announcement did undo the sharp escalation that had raised US-China bilateral tariff rates to triple digits. It also suggests a willingness to avoid a sustained collapse of US-China trade flows that would further disrupt investment interest in particular export-oriented industries, such as semiconductors and new energy.
