Sunday, June 24

US tariffs target China’s AI strategy – BlackRock

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Proposed US tariffs target products tied to China’s plan to become a leader in innovation — from tech hardware to artificial intelligence, wrote Richard Turnill, BlackRock’s Global Chief Investment Strategist. 

China has made no secret that it wants the country to be an AI powerhouse, announcing partnerships across the region, as well as investments in infrastructures, like data centres.

 

Read MarketBrains’ China coverage

 

US and China roil markets

This week, financial markets were hostage to “tit-for-tat” trade actions between the US and China.

Global stocks initially bore the brunt of China’s proposed retaliatory tariffs on US imports. And though there were signs of willingness from Washington to negotiate a deal, it was later snuffed out by a fresh White House proposal for additional tariffs on Chinese goods.

BlackRock’s view is that US trade actions targeting China is more of an opening gambit for negotiations than the start of a trade war.

“But expect twists and turns as well as market volatility along the way,” Turnhill wrote.

Global tech stocks — stars of the post-crisis bull market — stumbled in recent weeks. Worries that trade tensions and regulatory scrutiny could dent profitability have shaken confidence.

But BlackRock is sanguine.

“We do not see a swift rebound in valuations, but expect earnings growth to power returns. We stick to our preference for tech within our positive view on equities,” Turnhill wrote.

The current tech market is not for the faint-hearted: policy risks reign and markets have quickly priced in greater uncertainty.

“We believe recent weakness reflects rising risks but is not a tech wreck in the making. Strong fundamentals underpin our preference for the sector,” he added.

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