Investors Shift to Chinese Equities as Hang Seng Rises 17% Amid Trump's Trade War

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Updated Mar 14, 2025, 10:11 AM

Amid fears of a recession triggered by U.S. President Donald Trump's trade war, global investors are turning to Chinese equities as a surprising safe haven. The Hong Kong's Hang Seng Index has risen 17% since Trump's inauguration in January, while the S&P 500 has dropped about 9%. This shift in investment preference is attributed to the perception that Chinese stocks offer a real alternative to U.S. assets, with the Hang Seng Index trading at a significantly lower price-to-earnings ratio compared to the S&P 500. The rally in Chinese stocks is largely driven by technology shares, which have surged 29% in 2025, reaching their highest levels in over three years. The surge is partly due to the debut of AI startup DeepSeek and the prospect of fiscal stimulus boosting consumption. Investors are also reacting to the volatility in U.S. markets, with some moving funds out of South Korea and India into Chinese equities. This movement is supported by recent record conversions of U.S. dollars and Chinese yuan into Hong Kong dollars. Opportunities are seen in tech, defense, and consumer-facing plays.

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