“In a globalized economy, micro-recessions between industries and countries is how the market corrections will play out,” says Ibrahim Hanif.
Explaining recent shifts in the portfolio of Hangman Capital as well as the decision to move its domicile from Hong Kong Hanif states that there will not be another worldwide recession. The recent Coronavirus scare and the impact it had on the Chinese economy shows this.
China is an essential part of many American businesses’ supply-chain. For major corporations, Chinese consumers are a core bottom-line booster. Yet with these factors still valid, a sudden slowdown of the economic giant had a little impact that persists. This phenomenon constitutes the first portion of Hanif’s argument. The blocs have sufficiently hedged against recessions occurring within local economies.
This argument can be countered by citing the fact that the Chinese economic slowdown comes towards the tail end of a trade war with the United States. Moreover, a global shift towards green consumerism has been in motion, which China does not specialize in. So it might very well be the case that this hedge is a happy accident.
Hanif maintains that despite these factors, such recession-proofing across geography furthers his point. The second argument he cites has to do with a cross-industry analysis of financial statements.
“For emerging economies, the net result across industries seems to result in year-on-year growth in GDP,” Hanif asserts. What this means for individuals within the economy is that different demographics within a country will experience the impact of a recession while other portions of its population will be reaping fruits of a bull market.
When lobstermen are feeling the heat of the China-US trade war, human resources at Facebook, Apple, and Alphabet are receiving bonuses. What this means for social and cultural landscape remains unclear. But according to Hanif, individuals best at transferring across industries, have the best chance of remaining relatively secure next to the versatile investor.
Macroeconomic predictions of this nature take time to be proven right or wrong. Time will tell the accuracy of claims of a recession-tag becoming markets’ self-correction tool. All in all, it is a safe choice to have cross-industry competence and brush up on investment knowledge.
Ibrahim Hanif is a business strategist and investor best known for the management of Hangman Capital. He also produces educational content and business research for entrepreneurs in the United States, Asia Pacific, and the Middle East.