Dah Sing Bank: Tariff negotiations may gradually unfold in the coming months, optimistic about the safe-haven characteristics of bonds

Dah Sing Bank's Economic Research and Investment Strategy Department today released the latest investment hotspot analysis. In response to the implementation of reciprocal tariffs and the reactions from various countries, along with the increasing opportunities for interest rate cuts by central banks, the bank is optimistic about sovereign and investment-grade corporate bonds with more defensive characteristics, while downgrading its outlook on Hong Kong stocks to "neutral" and on U.S. stocks and other Asian markets to "bearish." Dah Sing Bank mentioned that China's announcement of countermeasures, imposing a 34% tariff on the U.S., triggered increased volatility in global financial markets. The global trade war is further intensifying, and the risk of recession in the U.S. has significantly increased. Additionally, financial market volatility may exacerbate the risk-averse atmosphere and liquidity tightening, which is expected to have a greater impact on global economic activity. To alleviate the challenges posed by potential contraction in external demand, mainland China may place greater emphasis on boosting domestic demand (especially consumption). Coupled with the development of artificial intelligence in the mainland, there may still be support for Hong Kong stocks in the medium term. As negotiations related to tariffs are likely to unfold in the coming months, market volatility may remain high for some time, and investors should be mindful of risks and maintain diversified investments