Position defensively in China stocks amid stimulus watch, Trump jitters- UBS

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Position defensively in China stocks amid stimulus watch, Trump jitters- UBS

Investing.com-- UBS recommended positioning defensively in Chinese markets, citing near-term risk and volatility from uncertainty over more stimulus measures, as well as trade headwinds from a Donald Trump presidency.

On the stimulus front, UBS said Beijing was likely holding off on more targeted fiscal measures until it had more clarity on what Trump’s stance will be towards the country. China’s National People’s Congress approved 10 trillion yuan in debt measures aimed at supporting provincial governments. But investors were underwhelmed by a lack of targeted fiscal measures, which dented Chinese equity markets.Chinese stocks had rallied through late-September and early-October after Beijing flagged plans for more stimulus. But they largely reversed this rally in the run-up to the U.S.

“Domestically oriented, SOE-heavy segments should outperform in a volatile environment while also benefiting from greater policy stimulus. Growth sectors are more susceptible to stimulus disappointments and near-term US policy uncertainty,” UBS wrote in a note.

 

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