
US-China trade war to fuel shift to alternative assets as stock markets tumble
Investors should diversify and pay closer attention to alternative assets amid stock market volatility caused by the tariff war, according to experts.
Advertisement
As US President Donald Trump acts on his campaign promises, including tariff increases that have heightened tensions between the US and its global trading partners, especially China, investment specialists are warning against making rash decisions given the markets' unpredictability.
'This is a timely opportunity to diversify into alternative [assets] such as private credit, private equity and hedge funds,' said Samuel Rhee, co-founder and chairman of Endowus, a Singapore-based investment platform.
He added that private credit funds offer stability, as their assets were less correlated to market volatility, allowing for more secure long-term investments.
02:40
China raises tariffs on US goods to 125% as Xi calls on EU to resist 'unilateral bullying'
China raises tariffs on US goods to 125% as Xi calls on EU to resist 'unilateral bullying'
Trump fired the first salvo in the current trade war, announcing so-called reciprocal tariffs on America's trading partners on April 2, including a 34 per cent levy on China, which has run a massive trade surplus with the US. The back-and-forth retaliation between Washington and Beijing has pushed US tariffs on Chinese goods to 145 per cent and on US exports to the mainland to 125 per cent.
Advertisement
These developments saw Hong Kong's benchmark stock index sink 13.2 per cent on April 6, its worst showing since the Asian financial crisis in October 1997. The Hang Seng Index eventually lost 8.5 per cent last week, the most in five years. Markets on the mainland and across the globe also slumped as a result of the trade war.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


South China Morning Post
2 hours ago
- South China Morning Post
State of US-China trade ties, Beijing's tariff relief for Africa: SCMP daily highlights
Catch up on some of SCMP's biggest China stories of the day. If you would like to see more of our reporting, please consider subscribing After two days of closely watched trade talks between the United States and China in London, US President Donald Trump has declared the negotiations have led to a wide-ranging deal to maintain the fragile truce laid out after earlier talks in Geneva. China's home-grown AG600, the world's largest amphibious aircraft, has been given the green light for mass production, marking a step forward in building an independent and globally competitive aviation industry. Illustration: Henry Wong Many who entered university during Trump's first trade war with China are ready to become key cogs in China's hi-tech engine.


RTHK
6 hours ago
- RTHK
Tech losses lead Hang Seng Index to lower close
Tech losses lead Hang Seng Index to lower close The benchmark Hang Seng Index ended the day down 331.56 points, or 1.36 percent, to close at 24,035.38. File photo: RTHK Stocks in mainland China and Hong Kong ended mostly lower on Thursday, led by declines in the tech sector, as markets struggled to sustain the positive momentum from the Sino-US trade talks that lacked concrete details. In Hong Kong, the benchmark Hang Seng Index ended the day down 331.56 points, or 1.36 percent, to close at 24,035.38. The Hang Seng China Enterprises Index slid 1.53 percent to end at 8,729.96 while the Hang Seng Tech Index slumped 2.20 percent to 5,331.33. Mainland Chinese stocks ended up mixed, with the benchmark Shanghai Composite Index up 0.01 percent at 3,402.66 and the Shenzhen Component Index closed 0.11 percent down at 10,234.33 The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 0.26 percent to close at 2,067.15. Among major losers, chipmaker SMIC fell 2 percent to a one-week low. Alibaba weakened 3.2 percent and EV maker Xpeng slid 6.7 percent. The CSI Rare Earth Index closed flat after slipping nearly 1 percent in the morning session and continued to hover near its seven-month high. A trade truce between the world's two biggest economies was back on track, US President Donald Trump said, a day after negotiators from Washington and Beijing agreed on a framework to ease bilateral retaliatory tariffs. Under the agreement, Beijing will lift export curbs on rare earth minerals and the United States will restore Chinese students' access to its universities, Trump said on Truth Social. Yet the terms remain subject to final approvals, with details notably absent. The 55 percent tariffs on Chinese imports will also stay, US Commerce Secretary Howard Lutnick said. "We still don't know if what Trump says will actually happen. It's disappointing that the tariffs rates were not dialled down at all and tech curbs on China were not even mentioned," said Jason Chan, senior investment strategist at Bank of East Asia, Hong Kong. The talks left key issues, like chip exports, unaddressed, leaving room for conflicts in the future, and no one knows for how long the current truce will last, he added. Chinese markets have been struggling to recover from trade shocks for the past two months after Trump announced sweeping tariffs on April 2 that threatened the global trade system. The CSI 300 Index has barely eked out any gains since then, while the Hang Seng Index has climbed 3.5 percent, but the two are underperforming the nearly 10 percent bounce in the MSCI World Index . The market is less sensitive to trade talks and investors are shifting focus to economic fundamentals, Wang Zhuo, partner at Zhuozhu Investment, said. "The key for China now is to bolster manufacturers' confidence and break the deflationary trend." (Reuters/Xinhua)


South China Morning Post
7 hours ago
- South China Morning Post
Bursting of US exceptionalism bubble a boon to Chinese stocks
The facts speak for themselves. On June 9, the Hang Seng China Enterprises Index (HSCEI), a gauge of mainland Chinese stocks listed in Hong Kong, entered a bull market after having risen 22 per cent since its recent low on April 7. The HSCEI and the MSCI China Index, which tracks Chinese companies listed at home and abroad, have largely outperformed all other major equity markets this year. That the sharp rally in Chinese shares occurred against the backdrop of deflationary pressures that show no sign of easing, low consumer confidence , a festering crisis in the property sector and a dramatic escalation in the US-China trade war makes the gains all the more remarkable. Several factors are at work. One of them, as Morgan Stanley noted in a report on May 20, is global investors' 'deeply underweight' position in Chinese equities following years of extremely bearish sentiment. This has created a 'sizeable allocation upside potential in moving from [an underweight to a neutral position]', Morgan Stanley said. A more important factor – and the most unexpected one – is the strong conviction on the part of many investors that the long period of US exceptionalism in markets has come to an end. US President Donald Trump's ruinous trade policies , blatant disregard for the rule of law and planned reckless tax cuts that add to America's ballooning public debt have cast doubt over the perceived safe haven status of US assets, especially the US dollar. The mantra of 'Tina' – There Is No Alternative – to US equities has given way to diversification as investors seek to rebalance their portfolios away from the United States. While there is intense debate about the pace and consequences of diversification, the waning appeal of US assets is a boon to Chinese stocks. Morgan Stanley says there is a 'higher willingness to add more positions in Chinese equities, fuelled by global diversification demand'. Nomura says 'the fading of the 'US exceptionalism' theme could help Asian equities', with China, India and Japan best placed to capture 'reallocation flows' given the depth and breadth of their stock markets. Goldman Sachs, meanwhile, notes that Chinese stocks tend to perform well when the yuan strengthens versus the US dollar.