Global Stock Indexing and Trading
The world stock indexes are caught in a highly volatile environment today with the current focus being on the trade battle between China and the United States. In recent months, China has grown its share of the global economy while the U.S. economy has faltered and its stock market continues to suffer.
Both the Chinese government and the Chinese stock markets have a direct impact on the U.S. economy. The two countries have a profound and significant relationship that continues to play out in the global financial markets and in the stock market.
As more Chinese money enters the U.S. stock market, the U.S. stock indexes begin to suffer. The problem is compounded when it becomes apparent that many of the largest financial institutions in the country are investing in the Chinese stock markets as well. A number of U.S. companies are purchasing their shares from China to make it easier to do business in that country. Meanwhile, many U.S. companies are selling their shares in the U.S. market to China in order to make it easier for them to do business there.
Global stock indexes have also suffered as a result of the growing imbalance in the relationship between China and the U.S. When China takes control of its currency, the value of its stock market becomes greatly reduced. In the past, China has always been able to gain a lot of its economic growth from buying up large volumes of U.S. bonds.
Today, because China has no large amounts of U.S. bonds to purchase, its stock market has begun to suffer a significant decline in its value. Investors in other countries and many in the U.S. have begun to speculate that the Chinese government may be taking advantage of the weakness in the U.S. stock market in order to increase the value of its own stock market.
Of course, the Chinese government does not want a trade war with the U.S., but they do want to use the current situation as an excuse to devalue their currency and increase their own share of the global economy. They also want the U.S. to stop using their dollar to trade with other nations, but that would be impossible unless the U.S. decided to take back their dollars and stop using the U.S. bonds to do so.
The stock indexes have been hurt by the growing conflict between the Chinese government and the U.S. as China attempts to prevent a trade war.
If you have any doubt about the potential for the global stock indexes to continue to suffer as a result of this recent conflict, just ask yourself, “Is the Chinese government’s move to take a larger piece of the global economy going to hurt my investments?” I’m betting the answer is no. Please consider all this.
If the Chinese government does end up taking control of its currency, the U.S. dollar is set to become worthless. That’s right; China will be able to control a large amount of the global economy if it gains control over the value of the U.S. dollar.
That means that the U.S. stock market could be severely affected, and the global economy could be badly affected. That’s not a very happy scenario for anyone. So, how can you protect your investment and avoid this potential disaster?
Well, you can invest in a diversified portfolio of global stocks. You can choose a portfolio that includes a variety of different countries, including Japan, South Korea, Germany, Switzerland, the European Union, Canada, China, Australia, India, Sweden and a host of others.
In addition to being able to protect your investments and stay out of this potential disaster, you can also avoid losing a lot of money in your global stock markets. Because your portfolio contains many different countries, you will be less likely to be affected by a large fall in the value of one country. Because you have a diversified portfolio, your investment portfolio will also be less likely to suffer as a result of a large move in the value of one country.