China and its America-bound exports may be in President Trump’s crosshairs, but the escalating trade war doesn’t seem to be slowing down Chinese stocks.
In fact, they have been flying since the start of 2025, far outperforming their US counterparts, even in the face of Washington’s 10 percent tariffs on Chinese imports.
The iShares China Large-Cap ETF (Ticker: FXI) is up over 22 percent in 2025 compared to a 2 percent gain in the S&P 500. Meanwhile, the iShares MSCI Emerging Markets ETF (Ticker: EEM), which holds over a quarter of its assets in Chinese stocks, is up 7 percent.
So if fund flows follow performance – as the old market maxim says – why aren't financial advisors rushing to buy Chinese stocks for client portfolios?
Brent Coggins, chief investment officer at Triad Wealth Partners, generally holds a “structural underweight” allocation when it comes to emerging markets through passive and factor-based ETFs. He currently has no plans to add additional China exposure to client portfolios.
“We like the Chinese market from a valuation perspective, particularly relative to the US, and have been enthused by recent potential tailwinds from their tech sector, the role DeepSeek may play within the AI sphere, as well as stimulus announcements and a regulatory environment that seems to be trending more business-friendly,” Coggins said.
“However, we are skeptical this time will be much different from previous China rallies that have a propensity to stall out. You add structural issues to their economy, namely their ongoing property crisis, with the fact they are in the tariff crosshairs of the Trump administration, despite the rally and attractive valuations, it’s enough to keep us on the sidelines primarily from a macro perspective,” added Coggins.
Daniel Lash, certified financial planner with VLP Financial Advisors, is also in no rush to add more China exposure to client portfolios. In his view, China has a significant long-term population issue, which will impact the country’s economy over the long term.
“Without a serious increase in birth rates or immigration, both of which are unlikely, the population in China is expect to drop by approximately 100 million over the next 25 years,” Lash said.
He currently maintains minimal exposure to China and emerging markets, largely due to heightened volatility and the strength of the US dollar.
“Our approach mitigates risk by avoiding developing market instability and currency fluctuations that could erode investment returns,” Lash said.
On the other hand, Stephen Kolano, chief investment officer at Integrated Partners, is intrigued by the move in Chinese stocks and expects additional investor interest as they anticipate additional stimulus measures from the PBOC to help the property market and overall economic growth.
“With the global geopolitical landscape shifting, it seems there is optimism around new trading relationships where China may benefit,” said Kolano, adding that he primarily accesses Chinese stocks through emerging markets ETFs.
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