Trump’s return is not all bad news for Chinese stock investors: analysts

Donald Trump is set to become America’s 47th president. The man who set off the US-China trade war in July 2018 may spell bad news for exporters. All told, that episode resulted in tariffs on US$550 billion worth of Chinese exports and US$185 billion worth of US goods.

Should global investors in Chinese stocks be worried about his second presidency? History suggests such concerns are misplaced.

The MSCI China Index, which tracks 700-odd Chinese stocks traded at home and abroad, returned 98.4 per cent in US dollar terms during his first presidency (January 2017-2021), while the Hang Seng Index jumped 31 per cent and the CSI 300 gauge of onshore stocks advanced 73.6 per cent.

Here are some takeaways on the outlook for Chinese stocks by some global fund managers and investment banks.

BCA Research: Will the prospect of expanding trade tensions lead to more Chinese stimulus, and create an opportunity for Chinese equities? Not necessarily. The Trump victory is not a surprise and China’s stimulus plan was designed with this scenario in mind.

While a large stimulus is coming, it is unlikely to create a meaningful recovery on a six- to nine-month horizon. Moreover, US and China will reach a trade deal, but getting there will generate volatility. For the US to get its desired deal, “it needs to threaten credible pain”, the Montreal-based firm said in a report on Thursday.