Q: Buy into US exceptionalism given the dip (-10% YTD)?
Near-term S&P500 outlook remains uncertain given limited visibility on evolving tariff dynamics and its global economic impact. The situation is fluid – e.g. Trump’s reciprocal tariffs were announced on 2 Apr but paused just a week later, with ongoing negotiations like Japan’s Finance Minister visiting DC next week.
Remain constructive long-term on the Magnificent 6 (excl. Tesla which seems to trade a lot on sentiments), whose scale and R&D spend can only be rivalled by a few. And that is one solid long-term moat. US exceptionalism is really largely driven by the Magnificent 7 anyways.
As such, I would continue to DCA into SPX (for simplicity vs individually buying into each Magnificent 6) with long-term patient capital but avoid speculating on short-term movements.
Q: Should we turn more defensive given the impact of tariffs on the global economic climate?
Any thaw in US-China / US-global trade tensions could undermine a defensive position, and this looks increasingly likely.
Firstly, further escalation between US-China on trade tensions looks less likely now given both parties already have tariffs of >100% (i.e. China’s 125% retaliation and US 145%). HK/China stock markets have already slightly recovered, and China has been reported to be open to engaging in trade talks with the US.
Secondly, US have also shown signs that they do have a pain threshold (e.g. 90 days pause on individual reciprocal tariffs, reciprocal tariffs exclusion on smartphones/laptops/tech components, etc).
As such, I would avoid rushing into “defensive plays” like telecoms but instead look into regional diversification to have a less US reliant portfolio. European stocks look interesting given their attractive valuations and catalyst pathway (e.g. defence spending, new German government with emphasis on fiscal stimulus, etc.)
Q: Are there market dislocations to capitalize on?
I would also take the chance to look into stocks that are perhaps overly punished by the markets.
A few comes to mind:
- SATS (-25.27% YTD), trading at 7x 12M forward EV/ EBITDA, below its -2SD. No doubt this will affect their cargo business, but with the stock now at COVID price levels, the markets may be overdoing it. There is still its food solutions and ground handling business which are more tourism linked which do not have so much first order impact from tariffs.
- Nike (-24.31% YTD). This one is debatable because of a real threat of earnings compression with tariffs. However, at covid-19 valuations and sentiments at all time low, it could present a rare buying opportunity.
Q: Are China ADR de-listing fears overblown?
Concerns over potential US delisting of Chinese companies are resurfacing, with US Treasury Secretary Bessent and incoming SEC Chair Atkins hinting at the issue, and reports suggesting the Trump administration may pursue such action.
Impact should be manageable this time round because past delisting scares (2020–2022) prompted most large-cap Chinese ADRs to secure HK dual listings, leading to a drop in their MSCI China weighting from c33% in 2019 to mid-single digits. HK-listed shares now account for c60% of ADTV among dual-listed names – double the share from three years ago.
There are a few interesting Chinese tickers I really like (e.g. BOSS Zhipin), but I would avoid buying the US listed ADR in favour of the HK listed stock.
