Global investors are shifting their focus, moving away from U.S. equities and towards Chinese and European markets. China, once battered by economic headwinds, is now seeing a resurgence, driven by policy shifts and a booming tech sector. With a major AI breakthrough and fresh government support for domestic spending, momentum is building fast.
The Hong Kong Hang Seng Index has surged nearly 20% this year, reflecting renewed confidence in China’s economic prospects. A significant boost came from DeepSeek, a Chinese AI startup that made waves with its R1 reasoning model, igniting a rally in tech shares. Meanwhile, Beijing is taking decisive steps to fuel domestic consumption, unveiling a comprehensive plan that includes income increases, childcare subsidies, and relaxed credit policies. This follows the financial regulator’s move to ease consumer loan terms, ensuring liquidity in the market.
While optimism is rising in China, investors remain watchful as a pivotal week unfolds. The Federal Reserve’s upcoming policy decision will be closely scrutinised, with markets eager for signals on potential interest rate cuts that could restore confidence in U.S. stocks. The Fed is expected to maintain rates for now, but any indication of future easing could influence market sentiment globally.
China’s resurgence is shaping up to be one of the defining investment narratives of the year. With bold government initiatives and a thriving tech sector, the region is positioning itself as a formidable alternative to the U.S. market.
Fidelity China Special Situations PLC (LON:FCSS), the UK’s largest China Investment Trust, capitalises on Fidelity’s extensive, locally-based analyst team to find attractive opportunities in a market too big to ignore.
