U.S. markets show resilience with the S&P 500 up 15% over the past year and Treasuries relatively steady while the Fed is expected to ease. Rapid gains among the Magnificent 7 raise valuation questions tied to AI promise and long-term winners remain uncertain. Geopolitical uncertainty and political risk now influencing developed markets are driving investors to seek diversification beyond domestic assets. China attracts flows because of supply-side reforms and comparatively cheaper AI-linked stocks, offering a balance of regional risk for business owners and wealth-protecting strategies.
When President Trump returned to the White House his intention was clear: Make America Great Again. But the United States's economic partners, and some of its rivals, are also benefitting from having the unorthodox showman back in the Oval Office. Investors are watching the U.S. stock market with both enthusiasm and trepidation: The S&P 500 is up 15% over the past year, Treasuries have remained relatively steady, and the Fed's monetary policy is expected to begin a downwards trajectory.
But overlaying the strong fundamentals are questions: Is the soaring growth of the Magnificent 7 stocks overvalued on the unfulfilled promises of AI? Will Trump's unusual foreign policy materially damage the domestic economy? And where might the true winners of the artificial intelligence race emerge from? Increasingly, investors are answering those questions by diversifting into a key region says Willem Sels, the global chief investment officer for HSBC's global private bank. That region is China.
HSBC's Willem Sels tells Fortune in an exclusive interview that while U.S. markets remain resilient, geopolitical uncertainty is pushing investors to diversify portfolios-particularly into China. He highlighted Beijing's supply-side reforms and cheaper AI-linked stocks as catalysts drawing flows east, even as the U.S. continues to dominate long-term AI investment. America continues to prove to its economic resilience and earnings deliverables, Sels told Fortune in an exclusive interview, but geopolitical uncertainty is pushing investors towards balancing risk with other regions.
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