Page 7 - Sainsbury Strategy and Invetsment Recommendations

Risks

• Coronavirus – impact on global economic growth and corporate earnings, specifically a prolonged
downturn with longer to recovery

• Trade Wars – good to see a phase 1 deal signed, but we now need both sides to abide by it. Phase 2
and 3 deals are a long way off and may never be agreed to. As such, there’s the potential for a re-
escalation at some stage. There may also be potential backlash against the Chinese given the
suspected origins of the virus and their mis-information early on.

• President Trump – his unorthodoxy continues to cause market risks, in light of US remaining the
world’s superpower (across 3 dimensions – economics, defence, and technology) and the USD
holding reserve currency status.

• Chinese growth deceleration – could occur if the Chinese government were to stop their stimulus
program or were to incur a policy misstep. Trade wars also impacting Chinese economy in the short
term.

• Something left field – eg. Saudi / Russia oil price war, Iran / US tensions escalate bringing us closer

to a full blown war in the Middle East; etc.

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