Today’s Chart of the Day looks at the Goldman Sachs China Sales Exposure basket, which holds companies with the highest sales exposure to China, relative to the S&P 500. The index includes stocks that range from casino-operators, software and chipmakers to heavyweights like Boeing Co. Going back to 2018, the start of the trade war between the U.S. and China, stocks with Chinese sales exposure underperformed the broader market, moving on developments in negotiations between the countries. That changed in March 2020 with the onset of the pandemic, when those very underperfomers beat the S&P 500 despite the ~20% tariffs that remained on both sides. The trend declined slightly in 2021, but still illustrates just how fixated investors were on the pandemic than trade. Although Omicron is front-and-center, supply chain issues and the push to move production closer to home, a legacy of the trade war, is bringing some geopolitical concerns back into the spotlight.
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