According to Suresh Tantia, head chief investment officer of Asia equity strategy at UBS Global Wealth Management, the recent easing of tensions between the U.S. and China following the Trump-Xi summit allows investors to focus on market fundamentals rather than geopolitical risks.
He noted that while Chinese equities have underperformed compared to regional peers like South Korea and Taiwan, the technology sector's outlook remains strong due to structural growth in AI investments. Tantia highlighted impressive earnings from Chinese tech firms, such as Baidu's 49% revenue increase in its AI business and Zhipu's 132% revenue growth.
He believes that the current valuations and earnings growth prospects make investing in Chinese equities, particularly Hong Kong-listed tech stocks, appealing. Despite recent disappointing economic data from China, which showed lower-than-expected growth in consumption, industrial output, and investment, Tantia maintains that the compelling valuations justify increased market exposure.
UBS also sees potential in Chinese financials and commodity-linked sectors, as investors shift from low-yield bank deposits to equities in search of better returns