Market assesses trade war risk

Analysts say possible head-winds may savage sentiment, lower risk appetite

The proposed tariffs on certain Chinese imports by the Trump administration could cast a shadow on the earnings prospects of some Chinese companies, which could suppress the risk appetite of stock investors and raise market volatility, analysts said.

The financial markets may face greater headwinds than the actual economy as fears of an escalating trade war between China and the United States could substantially lower the global risk preference. So, the governments concerned should safeguard the security of the financial markets, said Cheng Shi, chief economist at ICBC International.