China's A-Shares Resilient Amid Tariffs, Investors See Opportunities

Several prominent global investment management companies have asserted that China's stock market, also known as A-shares, possesses the resilience to withstand the tariff measures imposed by the former U.S. President Donald Trump. These firms, including Franklin Templeton, UBS Global Wealth Management, Aberdeen Asset Management, and Morgan Asset Management, believe that the Chinese government's potential increase in fiscal support and a shift towards a more business-friendly environment could mitigate the negative effects of tariffs. Additionally, the continued development of artificial intelligence and improving corporate profitability are seen as factors that could further bolster the market.

Nicholas Chui, a fund manager at Franklin Templeton, described China as "the biggest opportunity set for investors," citing years of innovation, continuous policy support, and a shift in export destinations away from the U.S. He noted that profit recoveries across multiple industries have already begun and are expected to continue through the remainder of 2025. Despite the escalating trade war and potential growth headwinds, this optimism suggests that China's market leadership in global upswings could be sustained. It also indicates that investors may view sell-offs as buying opportunities, trusting the Chinese government's resolve to address long-term issues.

Mark Haefele, the Chief Investment Officer at UBS Global Wealth Management, stated in a report that the firm plans to focus on market opportunities and build investment exposure due to the Chinese government's shift towards a more business-friendly stance. This confidence aligns with local fund managers who have maintained a positive outlook on China's stock market for some time. Tai Hui, the Chief Market Strategist for Asia Pacific at Morgan Asset Management, wrote in a report that despite U.S. tariffs, "Hong Kong and China markets have shown resilience, partly due to potential stimulus measures. The development of artificial intelligence within the mainland could continue to drive corporate profits."

The better-than-expected corporate earnings in the fourth quarter, which exceeded expectations more significantly than the previous quarter, indicate that the Chinese government's efforts to revitalize consumption are beginning to bear fruit. However, some analysts remain skeptical about China's growth prospects. They argue that tariffs could hamper exports and weaken growth, especially given the fragile nature of the current recovery. China has vowed to retaliate and has demanded the immediate removal of tariffs. Nevertheless, Trump's actions could potentially grant China geopolitical advantages, allowing it to assume a leadership role in global trade, as noted by Xin-Yao Ng, a fund manager at Aberdeen Investment based in Singapore. Ng expressed a relatively optimistic view of China's medium-term prospects.