The Chinese market has been falling since early 2021, with the main indices down over 40% during this timeframe, while during the same period, the NASDAQ has advanced ~30% – a performance differential to put a fund manager out of business! This is one area where we are sitting in the contrarian corner, which is potentially a very bullish read-through for the ASX Resources Sector:
- We continue to believe that Beijing will steady and improve the Chinese economy, which will help the Chinese market – we already believe Chinese equities are in an accumulation zone.
- Conversely, while US Big Tech is largely made up of impressive companies at what price, the “Magnificent Seven” has almost single-handedly dragged the S&P500 back towards fresh all-time highs.
We entered 2023 heavily overweight in the Tech Sector, after a stellar year, we anticipate being underweight come January – a move against the crowd. AI is clearly here to stay, but as we’ve seen with lithium over the last 12-months a new macro trend doesn’t necessarily follow an obvious path for equities.
NB The “Magnificent Seven” are Microsoft (MSFT US), Telsa (TSLA US), Amazon (AMZN US), Alphabet (GOOGL US), Nvidia (NVDA US), Meta Platforms (META US) and Apple (AAPL US).
