As the Chinese New Year is ushered in, investors may also want to take a second look at China’s markets and country-specific ETFs to capture a potential rebound in this emerging economy.
“To be sure, there are many reasons to be cautious with respect to China. It is easy to imagine trade tensions reigniting or the economic data disappointing. But the outlook for China is still promising and the performance this year reflects that,” Christopher Dhanraj, Head of iShares ETF Investment Strategy, said in a recent note.
China is up more than 8% this year, compared to the 5.6% gain in the S&P 500, and BlackRock sees three factors that could continue to support the outlook for Chinese equities in the year ahead.
Specifically, Dhanraj highlighted easing trade frictions. The U.S. and China have agreed to a ceasefire in the trade war that gripped global markets last year, and the two are back at the negotiation table to find common ground.
“Although tensions are not likely to go away over the long term, we see room for trade frictions to subside in the short run. Both sides have incentives not to escalate the conflict and December’s market volatility in the U.S. stock market has led to wider recognition that trade tensions could hurt domestic business confidence and employment,” Dhanraj said.