President Trump's plan to slap a US$50 billion tariff on Chinese imports has raised concerns that we could be on the brink of a global trade war.
While I don't believe it will necessarily come to this, investors that are concerned about this eventuality and the negative impact it could have on the economy might want to consider increasing their exposure to defensive shares.
Three defensive shares that I think could be good options in volatile markets and highly unlikely to be impacted by a trade war are listed below:
ASX Ltd (ASX: ASX)
Thanks to its near-monopoly status, I think the operator of the Australian stock exchange is a great defensive share to have in your portfolio in volatile times. Its market-leading position has allowed the company to successfully grow its bottom line each year for the last five years and, following a solid half-year result, this is likely to be six years in a row in FY 2018. I expect this trend could continue for some time to come.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
The most recent data from the Australian Bureau of Statistics revealed that Australia welcomed 753,700 international visitors to its shores in January. This was an increase of 5.7% from the prior corresponding period. As the main gateway into Australia I believe the Sydney Airport will benefit greatly from the ever-increasing number of arrivals into the country for a long time to come. This should result in consistent and predictable earnings and distribution growth for the foreseeable future.
Transurban Group (ASX: TCL)
One of the best defensive shares on the Australian share market in my opinion would have to be this toll road giant thanks to its portfolio of important roads. As people will always value the time that they can save by using its roads, I expect they will continue using them whether the economy is booming or flat.
