Investors have found an alternative to American stocks due to instability in the US market. The introduction of trade tariffs against other countries has raised fears of a possible recession in the US
The introduction of new tariffs by US President Donald Trump, which many see as the beginning of trade wars, and the measures of the US authorities to reduce federal government spending have led to investors from all over the world switching to the Chinese market due to fears of a recession, Reuters writes. The Hang Seng Index (HSI) has risen by 17% since the beginning of Trump’s new term. At the same time, the S&P 500 Index (SPX) has fallen by almost 9% over this period, and the market value of companies in it has decreased by $4 trillion compared to record highs.
Andy Wong, a senior manager at Hong Kong-based Pictet Asset Management, notes that investors have moved from believing in the concept of TINA (there is no alternative to American assets) to TIARA (there is a real alternative). According to a Bloomberg Markets Live Pulse survey, nearly half of investors plan to reduce their position in the S&P 500 index over the next month, while less than 20% intend to increase it.
The reason investors are attracted to Chinese stocks is their cheapness, the agency writes. These securities are currently trading 30% below their 2021 highs. The forward P/E multiple for the Hang Seng index over a 12-month horizon reaches 7x, and for the S&P 500 – 20x.
