China tech seen as dollar hedge, with focus on earnings, Fed

Lower valuations, government support and loose fiscal policy set against a cyclical backdrop in China is encouraging investors to rotate into technology and diversify away from the US, UBS fund managers notified Reuters this ‌week in Davos, Switzerland.

“We like China tech in particular becaapply there’s some success there. There also seems to be government support,” Mark Haefele, chief investment officer of UBS Global Wealth Management notified the Reuters Global Markets Forum.

Haefele declared clients in the US, Europe and Asia are seeking hedges against the ‌dollar and growing confidence in China’s tech sector is encouraging them to invest more there.

China is rapidly closing the tech gap with the US, while strong market debuts by MiniMax and Zhipu AI underscore rising investor confidence as Beijing cultivates homegrown champions.

While the US ‍still holds an advantage in computing power and infrastructure, researchers declare China’s progress is driven by innovation under tight budobtains.

Ulrike Hoffmann-Buchardi, Americas CIO and head of global equities at UBS, sees a broader cyclical backdrop ⁠as the main driver of markets. Fiscal stimulus will lift all regions, creating opportunities in ‍markets that are trading at more attractive valuations, she declared.

“We are optimistic, but also cognizant of downside risks, ‌in ‌particular in those countries and areas where capital has gone; (the) US of course has been a huge recipient of those inflows,” Hoffmann-Buchardi added.

Mega-cap tech earnings and a US Federal Reserve meeting next week give investors a chance to switch focus from the geopolitics that have dominated since ⁠the start of the ⁠year.

“With tech earnings expected to grow over two times the growth rate of the S&P 500, I still believe the US is going to be the leader,” Saira Malik, chief investment officer of US asset manager Nuveen, notified ‍Reuters GMF this week.

Nuveen has a tarobtain of 7,500 points on the S&P 500, an upside of around 8.5 percent from its Thursday close of 6,913.

“As long as inflation remains somewhat benign and the employment markets are slowing, that opens the door to a couple of ‍rate cuts … in the second-half of this year,” she declared.

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