Analysis of China-US stock investment rounds in 68: Where to choose to invest?

The year 2567 is almost over. This year is considered a year that tests the spirit of investors extremely because various assets are fluctuating up and down, whether it is low-risk assets such as government bonds or high-risk assets such as global stock markets that rose well at the beginning of the year but fell in the middle of the year and fluctuated many more times at the end of the year, especially 2 big markets, the United States and China, which most investors have in their portfolios.

Let me round up the root causes of the unstoppable heat in the stock market, which comes from important issues such as interest rates, which are starting to enter a downward cycle that will continue into next year, and the return of "Donald Trump" How will a second term as US president affect investment? The question is, have US stocks peaked yet? What chance do Chinese stocks still have?

It may be recalled that at the beginning of this year, the world was expecting to see an interest rate cut by the US Federal Reserve (Fed). However, the Fed postponed the market's expectation in the middle of this year to the middle of September. The first interest rate cut was as high as 0.50%, down from 5.00-5.25% to 4.75-5.50%, and the second cut was another 0.25% in November. On December 17-18, the market expected the Fed to cut interest rates by another 0.25%, down to 4.25-4.50%, concluding the last meeting of this year.

The world has entered a downward interest rate cycle, which has benefited China in full. As the world's second largest economy is still slowing down due to the real estate crisis, China has been pursuing a loose monetary policy, both by reducing interest rates and pushing various easing measures to increase financial liquidity, solving the problem of a glut of real estate in the market, and proceeding with an economic stimulus policy by injecting 2 trillion yuan, followed closely at the end of September. The Chinese stock market jumped more than 10% in response to the good news in a short period of 40 days before consolidating at this time.

Overall, the global stock market since the beginning of the year (02/01/2567 - 30/11/2567), the CSI 300 index has given a return of around +15.66%, while Hong Kong's Hang Seng Index has +15.70% after falling more than 30% in the past 2 years. Personally, I believe that China is about to pass its lowest point in the stock market, real estate and manufacturing sectors. It is unlikely to be worse than this year.

In the US, this year is considered a golden year with hot stocks, despite concerns that the economy will enter a recession. But the economy is still strong and the performance of listed companies is still growing. Both US stock markets are performing well. The S&P 2567 index increased by 2% and the NASDAQ index increased by 500%. After the US election results, it was clear that "Donald Trump" will definitely return, causing US stocks to continue to make new highs without stopping. Although there have been waves of fluctuations along the way, the overall picture this year shows that US stocks have made new highs more than 27.19 times.

In 2568, what will the investment situation be like? Of course, there are serious risks. “China and the United States” Will the fighting get worse? This will lead to a new round of Trade War and Tech War that will spread to countries around the world. It will inevitably affect the stock market, which will be turbulent according to the temperature of the conflict that occurs from time to time. In particular, what will happen to the two giant stock markets? Can we still invest?

Personally, I think that since Mr. Trump's second term has clearly announced, American First Focus on the economic growth line, the innovation line, and focus on supporting businesses. These things will definitely be clear next year with the "corporate tax reduction" policy that is expected to start in 2568 and the interest rate trend that will continue to decrease by another 1%, expected to be at the level of 3.25-3.50%, which will be a positive factor for the profits of listed companies in the United States. The stock price will also increase accordingly, resulting in the tendency for capital to flow into the US stock market more in the future.

While the policy of setting tariffs on imported goods from abroad and the policy of blocking immigration may help Americans earn more income and spend more on consumer goods, it stimulates the economy and when the economy is good, the stock market will grow as well. Although there will be high volatility along the way, it will be an uptrend.

I see Goldman Sachs projecting that the S&P 500 will reach 6,500 by the end of 2568, supported by continued growth in the US economy and corporate earnings. It also projects that S&P 500 companies' earnings per share will average $268 in 2568, and warns that risks to the overall US stock market remain high in 2568 due to the possibility of tariffs and a rise in US bond yields.

Another warning from the Fed, which released a new survey on November 22, said financial experts were concerned about the rising US debt, the risk of a recession and international trade problems, which they saw as major threats to financial stability.

However, despite the US stock market adjusting up and down again, a survey by the American Association of Retail Investors (AAII) in early December found that investors increased the weight of confidence in the direction of the stock market in the next 6 months to 48.3% from 37.1%, while reducing the weight of uncertainty in the direction of the stock market in the next 6 months to 30.7% from 38.5% last week.

In addition, investors reduced their neutral view on the stock market direction to 21.0% from 24.3%. 

If you are confident that US stocks will continue to grow next year, choosing the right time to invest in the right stocks and holding them for the long term will give you the opportunity to profit from the upside stock price.

Let's look at China's situation next year. Although it inevitably faces the risk of a trade war affecting its economy, in the past several years, the Chinese government has been able to handle the proactive trade policies with the United States well every time and has responded every time. At the same time, it has turned to focus more on restructuring the domestic economy, especially the development of advanced technology industries to reduce dependence on foreign countries and elevate the country to a deep digital economy according to the national development plan. As a result, today, China is better prepared to handle the new round of the trade war amid the world's expectation that China and the United States will negotiate more. Because if the United States acts too extreme, the impact will fall on Americans who will have to consume imported goods at higher prices, which will not be good for inflation and the US economy. Therefore, we must continue to closely monitor the situation.

In addition, China still has the opportunity to continue to reduce interest rates and the injection of a large economic stimulus package of 10 trillion yuan by the Chinese government, which will begin to circulate into the economic system, will help restore Chinese consumer confidence. This may allow us to see inflation return. Therefore, next year, there is a chance that the Chinese economy will not slow down more than in 2567, and the performance of Chinese listed companies has the opportunity to adjust well in line with the economy. The Chinese government still targets GDP growth of 5% in 2568.

The risk of China's economic recovery may not happen soon next year because the real estate problem will take another 2 years to clear the overstock in the market. But China's bottoming out also shows the beginning of a new economic cycle. The Chinese stock market may face short-term volatility, but in the long run, I think Chinese stocks still have a bright future.

Another important point is that good Chinese stocks are still cheap. Jitta Wealth's Market Prediction compared the ratio of cheap stocks to expensive stocks (P/E) from the best stocks in the Chinese stock market and found that the number of cheap stocks to expensive stocks was 44:6, which is a ratio of cheap stocks to expensive stocks of 7.33 times (data as of December 2, 2567). It can be said that China still has a lot of cheap stocks, giving it a better chance of targeting the ones that will make a profit. Many of them also provide high dividend yields of 5-10%, making China still an attractive market for investment.

However, if you want to be sure, no matter which country you choose to invest in, I recommend that you do your homework and look at the fundamental factors of the stock in detail, whether it is the business trend, the future growth in the long term, the operating results or financial statements that have come out, the price is cheap or appropriate. Because it will help your investment have low risk and the chance that you will miss or lose is very low.

In principle, in addition to looking at the correct information, discipline is also important in investing, whether it is reviewing and adjusting the portfolio to always invest in 'good stocks at a cheap price'. Therefore, if we diligently do our homework, find investment opportunities in the stock market with many 'good stocks at a cheap price' and plan to 'invest at the right time', there is an opportunity to create good returns.

For those who still can't decide which market to invest in: Chinese stocks or US stocks?

I recommend that you diversify your investments in both markets and put them in your portfolio from now on because both countries are the world's number one and number two economies and have the goal of driving economic growth forward.

Which may not be able to answer whether in the next 5 years China will overtake the United States to become the number one in the world or not, but at least we know that no matter which country it is, it will probably not be higher than number 2. Therefore, if you invest in both countries, no matter who is number one in the world, your investment portfolio will benefit accordingly.