ETMarkets NRI Talk: Caught in the crossfire - how US-China trade tensions are reshaping NRI investment strategy
Various estimates now peg the odds of a US recession between 40–60%. And should that risk materialise, the downstream effects could be significant — from capital flows to emerging markets to the outlook on global equities and debt.
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As the world's two largest economies lock horns over tariffs and trade policies, the ripple effects are being felt far beyond Washington and Beijing. For Non-Resident Indian (NRI) investors , this escalating geopolitical standoff presents both risks and opportunities.In this exclusive interview, Vaibhav Porwal, Co-Founder of Dezerv, decodes how the US-China trade war is reshaping global investment strategies — from rethinking geographical exposure to leveraging India's manufacturing ascent.He also shares practical tips on portfolio diversification, gold allocation, and how NRIs can stay resilient amid rising macro volatility . Edited Excerpts - trade tensions between major economies like the US and China affect the global investment landscape for NRIs?A) When two bullies are fighting, it's often best to stay behind the fence and observe how things play out. India has largely maintained a non-aligned stance.That said, global trade tensions have a way of rippling through markets — they disrupt supply chains, dampen investor sentiment, and weigh on global growth.Various estimates now peg the odds of a US recession between 40–60%. And should that risk materialise, the downstream effects could be significant — from capital flows to emerging markets to the outlook on global equities and debt.In such times, staying diversified and grounded in long-term fundamentals becomes all the more critical.A) We believe the rate-cut cycle is already underway, and interest rates are headed lower. Major banks have started reducing deposit rates, signaling that the transmission is well in motion.Against this backdrop, it's a good time to consider locking in a portion of your portfolio in medium-duration bonds — particularly in the 2–3 year range.This can offer a balance of safety and reasonable yield while positioning your portfolio to benefit from the falling rate environment.Gold continues to act as a reliable hedge in volatile macro environments. We recommend allocating 5-10% of your portfolio to the yellow metal as a strategic cushion against geopolitical and currency risks.A) If the trade wars continue for a long time, geographical diversification will not help. It will be a situation where everyone loses. Asset class diversification will work better for investors.Within equities you can ensure that your portfolio is sufficiently exposed to countries which have heavier reliance on domestic consumption.Further you can ensure that the companies that you have invested in cater to domestic demand. Avoiding expensive valuations without backing growth and stability will be critical to avoid major volatility.A) The global supply chain is being rewritten — and India is in the right place at the right time. The government's ambitions are clear: grow manufacturing's share of GDP to 25%.PLIs, labour reforms, and tax incentives are not just policy talk — they're slowly turning into real capacity on the ground.The China+1 strategy, once a buzzword, is now becoming boardroom reality. I recently came across a compelling article highlighting how China's real wages are rising fast, eroding the cost advantage it once enjoyed. India is stepping into that vacuum.If the impact of tariffs were to play out as intended, the implications can be huge. For NRIs, this is an investment opportunity.However, this is not a short-term phenomenon. It will be a long drawn process to create a parallel supply chain. Setting up capacities, transfer of technology, and building the manufacturing infrastructure takes time.A) While mutual funds remain HNIs preferred vehicle for investing in equities, there are limitations on taking exposure towards international equity through Mutual funds.However, through GIFT city many wealth and asset managers are planning to create funds which will invest in global equities. Over the next 1-2 years you should see a lot of these options available.A) The rise of wealth in India's Tier 2 and Tier 3 cities has broadened our client base dramatically across 200+ cities.Currently, over 5.3 lakh users rely on our Wealth Monitor App for mutual fund and stock insights, and we are proud to be the primary wealth managers for more than 35% of them.Modern investors are not passive—they're actively managing their assets, with over 80% engaging in quarterly portfolio reviews.Our strategy is inherently tech-first—leveraging digital channels to ensure seamless service delivery—yet we also recognize that personal touch matters.That's why we've established physical offices in five major cities, so clients can opt for in-person consultations. This hybrid model supports robust, personalized client engagement while maintaining the efficiency of digital innovation.A) Gold and Medium-term bonds as discussed above should be considered by investors.A) As part of a disciplined investment strategy, equity investments should be staggered over the next few months to smooth out market fluctuations.In this context, large-caps present an appealing opportunity as we currently believe they are fairly priced. We advise caution with midcaps and smallcaps since they are still trading above historical averages.Since we foresee a market driven by bottom-up factors and individual stock performance, active management is key to capitalising opportunities.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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