Strategists Recommend Industrial Metals, Materials, and International stock market as the Best Play for China’s Rally
Global stock market capitalization is set to break its three-year high following interest rate cuts by the Federal Reserve and new economic stimulus measures from China.
According to Bank of America, citing GFD Finaeon data, the global market cap is poised to surpass the record $123 trillion set in October 2021. The Vanguard Total World Stock ETF (VT), tracking both U.S. and global stocks, has already reached a new all-time high, surpassing its 2021 peak.
Bank of America strategists, led by Michael Hartnett, noted that market panic tends to subside when policymakers intervene, which is now evident as both the U.S. and China have implemented key policy changes.
China’s monetary stimulus, which coincides with the Fed’s half-point interest rate cut, has sparked a surge in Chinese assets. The Hang Seng Index saw a 13% rise this week, marking its best performance since 1998.
With the Fed’s rate cut and no recession in sight, risky assets are getting a boost. Investors believe these policy actions from the Fed and China will ease recession fears.
Bank of America strategists highlight that the best way to capitalize on China’s economic rally is through industrial metals, materials, and international stocks, especially if China’s 10-year yield stays above 2%. Currently, the 10-year yield sits at 2.17%.
