U.S. fund managers from some of America's biggest firms are becoming more positive of their outlook on the Chinese economy despite uncertainties surrounding the trade war between China and the U.S.
Reuters suggested that some U.S. fund managers still like China whether or not a trade deal will be reached mainly due to the country's strategic response to American President Donald Trump's tariff threats.
Instead of dwelling on the threat of potential tariff increases, the Chinese government increased the country's monetary and fiscal stimulus, resulting to some sort of a cushion that won't allow for a hard blow as China overcomes its economy's slower growth rate.
Senior Investment Strategist at Wells Fargo Asset Management, Brian Jacobsen said, "The stimulus Chinese officials have started to drip-feed to the economy will likely result in a confluence of positive sentiment and positive growth surprises."
To help boost the Chinese economy, the country's central bank slashed its reserve requirement standards for commercial banks. This move helped ease lending difficulties. Tax cuts also helped bolster infrastructure spending that will further push the economy up.
For some American fund managers, China's decision to encourage lending promises growth that other analysts and economists may have missed. Portfolio Manager of Causeway Emerging Markets, Arjun Jayaraman pointed out, "We're seeing more lending to the private sector and higher quality growth."
Jayaraman's fund continues to increase its stakes in some of China's leading tech giants including Alibaba Group Holdings Ltd. and Tencent Holdings. The fund has also been betting on some Chinese property companies and banks that show a high percentage of growth and development.
On the contrary, some fund managers stressed that it may not be advisable to be too optimistic about a positive end to the trade war, noting that the final round of talks could be harsher and provide a more difficult path towards striking a deal.
Still, stock markets across the United States, Europe, and China moved up after Trump's Monday announcement that there was "substantial progress" in last week's negotiations between Chinese and U.S. delegations.
According to The Guardian, the Dow Jones industrial average closed 150 points higher and Chinese stocks recorded significant increases following the release of positive comments from both China and the U.S. Finance and tech sectors, in particular, led the rally with 7.16 percent and 5.94 percent in increases respectively.
Britain's FTSE 100 index jumped 20 points up while Germany's DAX index also improved by 0.6 percent following the trade war ceasefire.
