In a recent development, strategists from Nomura Holdings Inc. have revised their stance on Chinese stocks and have categorized them as a ‘tactical overweight’. This revision is largely based on the interim trade agreement between China and the United States, which is perceived as an influential factor positively affecting Chinese equities.
For many, the temporary reduction of tariffs came as a surprising move, and strategists believe that it is likely to nurture a risk-assured appetite amongst investors in the short term. It is this very element of surprise that is expected to prolong the recent respite rally observed in Chinese stocks.
The switch from a neutral position by Nomura Holdings is consistent with the highly encouraging outcome of the recent US-China talks over the weekend. These talks have substantially eased the ongoing trade tension between the two major world economies.
Following the negotiations, the US confirmed on Monday that most Chinese imports would witness a drop in tariffs from a staggering 145% to a much moderate level of 30%, for a period of 90 days. Concurrently, China’s punitive duties imposed on U.S goods will now be cut from 125% to a more acceptable 10%.
On top of that, President Donald Trump announced that China, being Asia’s premier economy, has committed to eliminate the non-tariff obstacles pertaining to imports. This move is a vital element of the deal and gives investors confidence regarding future trade practices.
This agreement aids in resolving a major point of contention between the two economic giants and many analysts have begun viewing it with a higher degree of optimism. The trade truce could be a strong catalyst in the uptick of investments into Chinese stock shares.
Leading up to the crucial dialogues over the weekend, local markets demonstrated a positive trend. More specifically, the previous week saw a significant boost in shares as a result of an interest rate cut, further adding to the upward momentum of the Chinese stocks.
In order to accommodate the more positive stance on Chinese equities, Nomura decided to slightly scale back its overweight perspective on India. This strategic move diverts the necessary resources to support the optimistic viewpoint for China’s stock market.
Nomura’s revision in strategy is notably the first significant uplifting of China’s allocation since the temporary ceasefire in the trade war was agreed upon by the world’s two greatest economies.
The post Chinese Stocks Witness Tactical Overweight after US-China Trade Agreement appeared first on Real News Now.
About Author
