Why the APEC 2018 Summit Failed… and the Silver Lining

In mid-November, the heads of state of the Asia-Pacific Economic Cooperation forum (APEC) met in Papua New Guinea for their annual summit.

APEC, a powerful collection of 21 nations that promote free trade along the Pacific rim, represents almost a third of the world’s population and around US$45 trillion, or 60% of the global GDP output.

You may remember that U.S. President Trump attended the forum for the first time in 2017 in Danang, Vietnam.

The setting was particularly poignant, as Danang sits right on the coast of the South China Sea, just a few hundred miles from some of the most hotly contested islands in the world.

Vietnam refers to the South China Sea as the “East Sea”, because China’s claims over much of it are seen as a direct threat to Vietnam’s territorial integrity and sovereignty.

And as I’ve written about numerous times before, this sea demarcates one of the major 'fault lines' between the world’s two largest economies and geopolitical rivals—the U.S. and China.

This year, President Trump couldn’t make it to the APEC forum in Papua New Guinea, so he sent Vice President Mike Pence to attend instead.

Photo credit: www.apec.org

Photo credit: www.apec.org

However, his counterpart—Xi Jinping—did make it, and he even arrived two days early to inaugurate a new highway and a school. In other words, to engage in PR showcasing China’s ‘soft power’.

You see, even impoverished Papua New Guinea, the poorest nation in APEC, is being factored into China’s ambitious 'Belt and Road initiative', an immense economic and political plan intended to reshape the world economy, to the dismay of countries like Vietnam who fear Chinese expansionism.

The summit was held under the shadow of what many regard as the biggest trade war in history and the very real specter of a slowdown in the global economy.  

And amid rising geo-strategic tensions between the world’s two biggest powers, the representatives of the various countries could not even agree on a joint communiqué to put together for the end of the summit.

That’s pretty bad and representative of the serious discord between the two major powers, considering communiqués are rarely binding and are normally just ‘expressions of desires’ to do something in the future.

Asian stocks tumbled in the aftermath and even seasoned political spin doctors found little positive light to shed on the meeting, instead mostly expressing hope that something more productive could emerge when Trump and Xi meet in Argentina on the sidelines of the G20 summit at the end of November.

However, as we've written about previously, not everyone is so upset about the trade war and rising tensions.

And as always, we do see a silver lining emerging from the deadlock, especially in third countries that are well-placed to benefit by absorbing business growth and opportunities.

What are these countries, and how do we find them for investors?

We've developed a proprietary investment indicator called the Capital Deployment Index (CDI), to identify them.

The one-of-a-kind Capital Deployment Index tells you exactly when bull and bear markets begin throughout various countries, industries, sectors, and ultimately stocks all over the world by tracking how debt is distributed throughout an economy, starting from governments and central banks.

Global politics is complex. The best we can do as individuals is to take control, to keep as informed as possible and continue to find ways to expand our wealth in the process.

As one of our valued readers, I highly suggest you dive into our various Proprietary Model Portfolios to ensure the trade war ends up doing more good than harm to your wealth, no matter how long it continues.

Peter Pham