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UBS has lowered its rating on China’s technology sector from Attractive to Neutral, following a strong year-to-date gain of 32%.

In a note to clients, the bank attributed the sector’s rally to growing enthusiasm around China’s recent advancements in artificial intelligence and the government’s emphasis on AI development at the National People’s Congress. However, UBS now believes that investors have adequately priced in the upside potential for Chinese internet stocks, limiting further near-term gains.

• “We no longer believe that markets underappreciate the potential for Chinese internet stocks”
• “At the same time, we see an increased risk of further tariff escalation between the U.S. and China, as key structural concerns remain unaddressed.”

Given these factors, UBS is recommending a tactical approach, advising investors to lock in profits and await greater clarity on trade policy or more attractive re-entry points before revisiting the sector. The bank maintains a Neutral stance on Chinese equities as a whole.

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Earlier:

• Citi downgrades US equites and upgrades China equities

This article was written by Eamonn Sheridan at www.forexlive.com.

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Despite the recent slide in U.S. equities, Deutsche Bank analysts contend that the decline is not a harbinger of either a broad corporate slowdown or an impending recession.

In a note to clients on Tuesday, DB acknowledged that market weakness may unnerve executives but argued that current conditions differ from past downturns linked to more severe economic disruptions.

• “The upshot is that while the U.S. equity market sell-off will undoubtedly make many CEOs nervous, it does not have the hallmarks of prior sell-offs that were actually associated with a material dip in corporate and ‘uncontrollable’ economic factors”

DB pointed to data suggesting that most companies have remained resilient despite heightened economic uncertainty.

• “Even though the market is legitimately worried about very high levels of economic uncertainty at present, it is premature to predict an extended pause in corporate expansion activity”

Deutsche Bank maintains its outlook for a strong rebound in business activity later this year, reiterating expectations for a material pickup in corporate expansion in the second half of 2025.

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Update:

This article was written by Eamonn Sheridan at www.forexlive.com.

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