This can be viewed as a continuation of STI Volatility article here. This update unfortunately faced Mexico Tariffs on the last trading day of the month and we see adverse dip in ST Index. This also marked Sell-in-May and go away complete.
Had a few conference calls with my colleagues in preparation for China Tariffs and now have to absorb the impact of Mexico Tariffs. Trump is keeping my brain busy. We know from day one that there will be some exodus of manufacturing out-of-China however how much and how long it takes still to be determine.
This basically boils down to what level of manufacturing is considered Not made in China. And everyone probably trying to do the minimum cut-off and finish the final product somewhere else. Asean, Taiwan, Korea, Japan and Mexico probably benefits the most from this trade war in term of job creation. This may means well for Singapore as regional HQ. Hong Kong may lose out.
We do know that if we are kept long enough outside China and if deep enough, we probably won't be moving back to China. For America market, naturally Mexico will be an ideal site due to abundance labors and lands. However for supply chain eco-system to work more smoothly, proximity to China will be better.
What will be the end game will be interesting to find out. The world may never be the same again.
Bye ... baby awakes now.
Cory
2019-0601
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