KUALA LUMPUR: Investors are advised to focus on sectors benefiting from China's growing domestic consumption while mitigating currency risks and diversifying into resilient industries like renewable energy and technology to navigate U.S.-China trade tensions effectively.
Ahmad Fidauddin, senior equity and derivatives dealer at Moomoo Securities Malaysia Sdn Bhd, noted that Donald Trump's potential reelection could reshape global markets, placing U.S.-China relations under renewed scrutiny.
The firm said that protectionist policies, such as tariffs and trade restrictions, are likely to significantly affect both Chinese and U.S. markets.
However, it also emphasised China's pivot toward economic self-reliance as a crucial trend, particularly in the face of potential trade disruptions.
Moreover, domestic consumption continues to be a critical growth driver, as shown in October 2024, when retail sales grew by 4.8 per cent year-on-year, reflecting strong local demand despite external pressures.
E-commerce giants like Alibaba and JD.com remain central players, benefiting from historic consumer participation during events like the 11.11 shopping spree, but they may face operational cost challenges amid escalating tensions.
"China's growing middle class and domestic consumption provide compelling investment opportunities, even as trade barriers increase," Moomoo Securities notes.
Moomoo Securities recalls the currency's past depreciation during the 2019 U.S.-China trade war when tariffs caused the RMB to cross the 7-yuan-per-dollar threshold and warned that investors should prepare for similar movements if tensions intensify, potentially driving the exchange rate below 7.3.
The firm suggests that investors monitor companies that have diversified supply chains and markets beyond the U.S., focusing on opportunities in Southeast Asia and the Middle East.
"Regional diversification is no longer optional for Chinese manufacturers—it's critical to survival in a decoupling global economy," the firm states.
Meanwhile, semiconductor restrictions imposed during Trump's previous term impacted Chinese firms significantly, and similar policies are expected to continue.
Moomoo Securities acknowledges the resilience of China's semiconductor sector, which grew 11.8 per cent year-to-date in 2024, but warns of ongoing challenges related to supply chain disruptions and dependency on U.S. technologies.
Meanwhile, renewable energy and electric vehicles (EVs) offer attractive opportunities. "Robust state backing and global leadership in green technology make China's renewables and EV sectors compelling for investors," Moomoo Securities explains.
As the countdown to Trump's inauguration on January 20, 2025, begins, Moomoo Securities advises a diversified and informed approach to mitigate risks while capturing growth opportunities.
"By adopting flexible and informed strategies, investors can mitigate risks while capturing opportunities arising from China's evolving economic priorities and global positioning," the firm concludes.