UBS Global Wealth Management cautions Chinese stock investors to adopt a defensive stance amidst persistent weak consumption and anticipated market volatility due to impending higher tariffs from Donald Trump.
Eva Lee, head of Greater China equities at the wealth manager, advised in an interview on Bloomberg Television that investors should focus on stocks yielding dividends above 6%, offering a compelling alternative to the 2% government bond yields, with sectors such as banks, utilities, and energy in focus.
Chinese equities experienced a rocky start in 2025, with a 2.9% drop on Thursday marking their worst annual opening in nearly a decade. The CSI 300 Index continued its decline on Friday, reflecting ongoing market jitters.
Despite last year’s government stimulus measures, which have helped stabilize major sell-offs, traders remain on edge due to heightened economic uncertainties in anticipation of US President-elect Trump’s upcoming inauguration later this month.
The world’s second-largest economy has signaled its intention to ramp up fiscal stimulus to counter tariff impacts, yet investors remain concerned over the speed and effectiveness of governmental responses, noted Lee.
On Friday, the Chinese government disclosed plans to issue additional ultra-long special treasury bonds in 2025. These bonds are intended to bolster trade-in programs aimed at consumer products and to fund significant projects.
Meanwhile, amid growing economic concerns and the prospect of further monetary easing, China’s bond yields have continued to decline. The 10-year government bond yield fell below 1.6% on Friday, marking a historic low.
