As the latest round of China-US trade tensions escalates significantly, top strategists from Wall Street financial giants suggest that beyond traditional safe-haven assets like gold and US bonds, global investors should shift their allocation focus toward a new type of defensive investment - relatively cheap and defensive value stocks in the Chinese market. Additionally, from a longer-term equity investment perspective, Chinese technology stocks remain one of the most favored market sectors for investors.

As the "TACO trade" betting on a significant moderation in the Trump administration's tariff stance may sweep the globe again after a six-month hiatus, popular Chinese tech stocks closely associated with artificial intelligence could become a key allocation sector for global capital in the medium to long term.

Equity market strategists from Citigroup Inc. believe that Chinese domestic yield-generating stocks are safer investment choices when China's AI and robotics-driven bull market faces higher tariff risks. Equity strategists from JPMorgan Chase suggest buying large bank stocks with long-term solid earnings and dividend records, which represent typical value stock targets in the Chinese market.

"The Chinese stock market is likely to experience style rotation in the coming weeks," wrote Hao Hong, Chief Investment Officer at Lotus Asset Management Ltd., in a report on Monday. "The relative performance of growth sectors versus value sectors has approached historical highs and is expected to see a reversal trend soon."

According to data compiled by statistical agencies, the CSI 300 Growth Index has outperformed the CSI 300 Value Index by approximately 25 percentage points year-to-date, potentially creating the best annual excess return performance in nearly two decades.

On Monday, Chinese stock markets (A-shares and Hong Kong stocks) continued Friday's sharp decline, primarily due to escalating China-US trade tensions becoming a global market focus. Previously, US President Donald Trump threatened additional 100% tariffs on Chinese goods in response to Beijing's announcement of broader new restrictions on rare earth and other critical mineral export carriers and related technologies. Although Trump later posted on social media expressing willingness to negotiate, market reactions showed investor sentiment remains very tense, explaining why gold and short-term US bonds continue to outperform risk assets like stocks and cryptocurrencies.

Overall, the latest investment views from major Wall Street financial institutions show a tendency toward Chinese value stock allocation to hedge market risks in the short term, while AI, robotics, and semiconductor domestic substitution-related Chinese tech sectors maintain strong investment value in the medium to long term.

Whether related to "tech autonomy/localization" trends in AI, semiconductors, humanoid robots, autonomous driving, and cloud computing innovation fields, or transformations driven by big data, Internet of Things, next-generation communication technologies (such as 6G/next-generation communications), and controlled nuclear fusion, all provide long-term support for China's tech growth sectors.

**Financial Sector Shows Unexpected Strength Amid Chinese Stock Market Weakness**

Although the CSI 300 Index fell 1.8% by Monday morning close with intraday declines reaching 2% and the overall market showing more losers than gainers, value stock-dominated indices generally performed strongly. For example, the utilities sub-index fell only 0.2%. The financial sector index declined just 0.8%, with some large bank stocks showing more resilient performance.

China Construction Bank's stock price rose against the trend during Monday morning's broad market decline, while Industrial and Commercial Bank of China fell less than 0.5% by morning close.

Equity strategists from Macquarie Capital Ltd. recently advised investors to withdraw significantly from momentum strategy-driven winners and shift toward companies expected to benefit from China's consumption stimulus policies.

"Investors should temporarily sell high-beta securities, pharmaceuticals, and some semiconductor stocks, and instead position in consumption stimulus-related investment sectors, such as some discretionary consumer targets," wrote equity strategists Eugene Hsiao and others in a research report.

Strategists from Wall Street giants like Citigroup and JPMorgan universally suggest buying large bank stocks with long-term solid earnings and dividend payment records in the short term, along with domestic yield-related investment targets, representing safer market bets amid potentially escalating tariff risks.

**Chinese Tech Stocks Merit Long-term Investor Focus**

However, certain specific sub-sectors of Chinese growth stocks still hold long-term investment appeal for investors, particularly high-quality semiconductor companies closely related to China's tech localization efforts/domestic substitution, and tech giants in the Hong Kong stock market that will benefit long-term from China's AI application super wave.

On Monday, two major China-based chip manufacturers - SMIC and Hua Hong Semiconductor - saw their stock prices rise significantly against the trend. The main logic undoubtedly lies in market expectations that this trade dispute between China and the US will further drive China to strengthen autonomous control in key tech fields like AI and semiconductors, significantly reducing dependence on imported US technology.

Driven by exploding global AI infrastructure demand, China's A-share computing infrastructure sector and "domestic chip substitution" related tech stock sectors amid China-US competition have become long-term market focus areas. Goldman Sachs and other Wall Street investment institutions are very optimistic about AI computing infrastructure leaders like Cambricon and VeriSilicon, as well as chip leaders continuing to hit historical highs with synchronized significant earnings growth.

Another major Wall Street firm, Morgan Stanley, recently reported that US investors show far higher interest in Chinese stocks than during 2021-2024. Focus areas include AI, humanoid robots, biotechnology, and innovative consumption sectors. The institution emphasized that US investor positive investment interest in Chinese stocks is at its highest since the COVID pandemic, with roadshows spanning both coasts. Whether at the index level or targeting specific themes and structural opportunities, US investor attention to the Chinese market has been quite surprising.

Morgan Stanley stated that over 90% of US investors clearly expressed willingness to increase Chinese allocation, the highest level since Chinese stocks peaked in early 2021. Multiple factors jointly drive rising investment willingness, and since the beginning of the year, US investors have recognized the institution's constructive view on China, recommending increased A-share holdings since June and being optimistic about thematic investment opportunities in artificial intelligence, robotics, and semiconductors.

According to the latest views from Bank of America (BofA) strategist teams, in the latter half of this decade (2025-2030), the "Magnificent Seven" US tech giants may no longer be the largest beneficiary group of the AI boom. BofA's strategy team bets that the "Magnificent Seven" will give way to tech giants from the Chinese stock market, namely China's tech leaders "BATX" - Baidu, Alibaba, TENCENT, and Xiaomi.