The conclusion of China’s Two Sessions has injected optimism into the Chinese and Hong Kong markets. Key policy measures include maintaining a 5% growth target and increasing deficit spending to 4% of GDP. Beijing has also pledged greater support for the private sector and cutting-edge technologies. Investors’ reaction to these announcements have been positive so far as the government is shifting priority to restoring the private sector and help drive economic growth. In our view, this positive momentum is still in its early stages, given how negative global sentiment towards China has been over recent years.

US-led trade tariff hikes have introduced significant political and economic uncertainty, primarily through passing higher costs for consumers and businesses, alongside the threat of retaliatory measures from trading partners. This has contributed to market instability and has dampened business optimism. We are cautious about trade-related developments due to their potential impact on global supply chains. However, we believe it is too early to make significant portfolio adjustments, as supply chains have historically demonstrated resilience to changing conditions.

US consumer sentiment has dropped suddenly as rising inflation expectations weigh on confidence. Consumers are growing more cautious with spending, fearing a decline in purchasing power. This hesitation is reinforced by slowing economic indicators such as retail sales. A closer look at the data reveals a significant decline in sales at food service establishments, which could signal weakening consumer demand. We will closely monitor whether this is a temporary fluctuation or the beginning of a broader negative trend.

At this time, we are still comfortable with our risk positioning, which remains well-diversified across various sectors and regions.