US-China trade war gives robotics and AI stocks a boost, says ROBO Global

Robotics intelligence company ROBO Global said that the pullback induced by US-China trade war offers a “rare opportunity” to invest in robotics, automation, and artificial intelligence (AI) stocks at a bargain.

US-China trade war intensifies

US stocks plunged this week as the trade war between the U.S. and China intensified. Washington last week raised duties on imported goods from China. In response, China raised tariffs on U.S. goods and imposed other retaliatory measures.

ROBO Global director of research Jeremie Capron said,

“We believe that a resolution to the trade war is likely before the G-20 summit in Osaka at the end of June,”

wrote Capron.

ROBO Global strategic advisor Louis-Vincent Gave commented. He said that both US and China are facing “significant political pressure” to secure a deal.

In a report, Capron wrote:

“President Trump needs to shore up his 2020 chances, while Xi Jinping looks to give his recently revived economy a much-needed boost and to tame critics.

Both sides also stand to lose significantly in the case of a breakdown, which would undoubtedly send the markets in a downspin.”

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According to the report, both sides agreed to back important market-access openings in various sectors. Also to tighten enforcement of intellectual property rights and protections for foreign investors.  This is a move, the report said, that will possibly benefit the robotics industry.

Robotics companies stocks rose drastically

The boon in the foreign suppliers of advanced technology is already reflected in the current earnings season.

Capron explained,

“This is because order rates in China began to improve in March, with the upward climb continuing in April following improvements in credit growth early in the year and a raft of better-than-expected macro numbers in the first quarter.”

To track firms focusing on robotics, automation, and AI, ROBO Global came up with the ROBO Global Robotics & Automation Index, the first of its kind in the industry.

According to the report, the world’s largest industrial robot firm FANUC Ltd hit a ‘turning point’ as orders had grown consecutively for the first time in five quarters. Consequently, the stock price surged 23% year to date.

Stock prices for other Japan-based automation and robotics company have increased. Companies like Nachi-Fujikoshi Corp., Omron Corp., and Harmonic Drive Systems, Inc., all rose to 33%-47% year to date.

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