Chief Economist Commentary

Global growth is losing momentum as the US shutdown tightens liquidity and China faces persistent deflation. Even so, supportive policies, limited investment alternatives, and slower equity issuance continue to create conditions for a steady slow-bull trend in the market.

Market sentiment in China’s A-share market may shift in the short run but its overall outlook is determined by government policy focus, sector fundamentals, and structural economic trends.

Economic priorities in China are shifting in the second half of the year as policymakers emphasize long term structural improvements, domestic consumption, and innovation driven growth.

US fiscal policy reversal signals a move toward greater government spending and liquidity also support is likely to improve investor sentiment and drive gains in equities and other risk assets.

Global tariff negotiations continue under tense conditions, with uncertainty surrounding policy direction and trade outcomes. Investors remain cautious as markets react to evolving political and economic signals.

The worsening relationship between Europe and the United States has become a catalyst for a reassessment of Chinese and Asian markets. Investors are reacting to new geopolitical realities that may alter global asset allocation patterns.

Trump’s tariff warnings have created short-term volatility, but their practical impact appears limited given China’s diversified export structure, reduced U.S. dependence, and ongoing domestic stimulus efforts.

While U.S. tariff rhetoric can trigger short-term volatility, China’s shifting trade structure and domestic fiscal support provide resilience against external policy shocks.

China’s fiscal expenditures have risen significantly since September as the government expands spending to stimulate growth and enhance liquidity across key sectors.