Foreign investors are steering clear of China's stock market as trade tensions escalate between China and the U.S. While the Chinese market showed a muted reaction to the latest tariffs, investors remain cautious due to uncertainty and concerns over China's economic growth. Analysts suggest that investors are taking a more measured approach to trade war fears compared to Trump's first term.
: As China and the U.S. battle over tariffs, locked in a tussle that could result in a deal or a trade war between the world’s two largest economies, staying away from China’s stock market is becoming the default option for foreign investors.
Conflicting reports on Wednesday over whether and when Trump and Chinese President Xi Jinping would talk and a sudden halt on the U.S. accepting postal packages from China - which blindsided e-commerce stocks - highlighted the pitfalls investors want to avoid. Global investors were already wary about China’s growth prospects due to concerns over its protracted property crisis, deflationary pressures and the lack of follow-through on Beijing’s promises of stimulus.
“I think that a lot of people say that China’s waiting for Trump and they’re going to have all this kind of stimulus to roll out. I don’t really believe that,“ said Sat Duhra, portfolio manager for Asian dividend income at Janus Henderson. Mainland blue-chip stocks fell 0.6% on Monday for a 3.6% drop over the year to date, against a 3% rise for global stocks.
To be sure, some investors say Chinese markets are still relatively cheap - with a forward price-to-earnings ratio around 11 for the Shanghai Composite compared with 22 for the S&P 500 - and that opportunities abound for stock picking.
Finance TARIFFS CHINA US STOCK MARKET INVESTORS
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