U.S.-China tensions are likely to come off the boil under an incoming Joe Biden administration, easing the way for global money managers and institutional investors alike to deepen their ties with the mainland over the coming year.
That improvement could depend as much on matters of style as on substance, auguring a relationship that — even if considerably more contentious than its pre-Trump incarnation — can be pursued in a business-friendly way.
"Tariffs by tweet" are likely to give way to a more predictable policy process — a good development for markets, said Paul Hsiao, Hong Kong-based economist with PineBridge Investments LLC. New York-based PineBridge managed $111.7 billion in client assets as of Sept. 30.
Bilateral support in the U.S. for a tough approach to China could leave Trump administration policies on national security, intellectual property and technology transfers largely in place but more communication and dialogue will allow for better management of risks, agreed Wenli Zheng, Hong Kong-based vice president and portfolio manager of T. Rowe Price Inc.'s recently launched China Evolution Strategy Fund.
"A cooling off in government rhetoric" will allow business leaders in both countries to quietly resume normal operations, he predicted. Baltimore-based T. Rowe had assets under management of $1.42 trillion as of Nov. 30.
Heightened bilateral tensions — including, most recently, an executive order signed Nov. 12 by President Donald Trump forbidding U.S. investors from trading stocks or bonds of mainland companies linked to China's military — have impeded the pickup in U.S. institutional allocations to Chinese capital markets, some market veterans say.