UBS: Chinese Stocks Face Increased Volatility Due to Tariffs and Stimulus

Forex - UBS Global Wealth Management's Chief Investment Office maintains a neutral stance on Chinese equities following a policy-driven performance in 2024. According to Mark Haefele and Min Lan Tan from UBS GWM, while U.S. tariffs are expected to come into effect in 2025, Chinese officials are waiting for more clarity before implementing stimulus measures. Analysts suggest that the increase of the effective U.S. tariff rate on Chinese goods to 30%, with less of an increase than threatened, will lead to multi-year fiscal expansion to support both growth and market sentiment. "A higher increase than this would necessitate much larger stimulus to keep China's growth on target and to prevent a market downturn," they stated. With anticipated volatility ahead, UBS GWM favors sectors such as finance, utilities, energy, and telecommunications. UBS also notes their value in the internet sector and highlights that future weaknesses present buying opportunities, expecting earnings per share growth of about 8.5% in 2025 before slowing down in 2026.