The US-China Trade Conflict: A Balancing Act for Investors
Despite the recent hiccups in US-China trade talks, the intricate interdependence of these economic giants hints at a continued dialogue, steering clear of the extreme measures witnessed earlier this year, according to a research report by CLSA.
This report offers a glimmer of hope for investors, suggesting that the Chinese stock market may not face significant downturns. In fact, CLSA believes that the A-share market's volatility is currently more stable compared to its H-share counterpart in the short term.
However, the long-term strategy proposed by CLSA is intriguing. They maintain a positive outlook on the potential allocation in the H-share market, highlighting the presence of high-quality companies in key industries like Chinese internet (AI), semiconductors, biotechnology, and resources. This long-term view is further supported by the Southbound Overbought Index (SOI), which continues to rise despite the waning Hong Kong market.
But here's where it gets controversial: historically, an SOI level of 1+ has indicated smart money buying at attractive prices. However, the current SOI level stands at 0.6, prompting Citi to advise patience and a wait-and-see approach until clearer signals emerge.
So, the question remains: Is it time to jump into the H-share market, or should investors hold off for a more opportune moment? What's your take on this strategic dilemma? Feel free to share your thoughts and insights in the comments below!
