China

China's slowdown coincides with at least a minor global oil shock – a combination we have long feared.

This report examines the implications for Chinese exports and global trade in light of the US Supreme Court’s ruling on tariffs.

The CNY is undervalued and highly competitive. This gives China room to let the currency appreciate while remaining an export-driven powerhouse, gradually shifting from export intensity toward stronger domestic consumption. This achieves two objectives. First, it narrows the capital account deficit and strengthens the CNY’s role as a global anchor. Second, it enhances Beijing’s geopolitical autonomy by reducing reliance on foreign final demand.

China is providing limited stimulus, promoting tech and trade, and maintaining a tariff truce with the US in 2026. Structural flaws and great power struggle continue to cast dark clouds over the long run.

This report analyzes the structural and cyclical factors driving service spending in Chinese households and highlights sectors with promising investment opportunities for the next 6 to 12 months.

Much like the 2000 episode, we expect this year to unfold in two stages: A “Great Rotation” from tech stocks to non-tech names in the first half of 2026 followed by a broad-based selloff in stocks in the second half on the back of a weakening US economy.