Why investors are not wrong about the trade war with China


Shanghai's composite index has fallen by more than 20 percent so far this year and is almost 30 percent lower than the 52-week high.

However, major Chinese technology companies may be penalized unfairly by investors.

China's giants of technology produce a large share of their sales and profits from Chinese consumers and companies and are not affected by tariffs in the same way as Chinese financial and industrial companies.

Tina Byles Williams, managing director and chief investment officer of the asset management company of the FIS Group, said that withdrawals from Alibaba (BABA), Baidu (BIDU), Tencent (TCEHY) and Sunny Optical (SNPTF) Huawei smartphones, Xiaomi, Oppo and Vivo, are a little exaggerated.

"China will face some challenges, but we believe that excessive sales are likely to be excessive," Williams told CNN Business.

The US strikes the heart of China's technological ambitions with the ban on chip manufacturing

Byles believes that Chinese healthcare companies are also being wrongly punished for the same reason: they focus on Chinese consumers.

It confirms technology and healthcare companies "New China".

However, Williams said investors should probably remain in Chinese ETFs as opposed to individual stocks in order to minimize the risks.

The company owns both KraneShares MSCI All China Health Care (KURE) and ETFs of KineShares CSI China Internet (KWEB). IShares MSCI China ETF (MCHI) also holds great positions in top Chinese technology and businesses.

Moody's credit rating agency is also optimistic about Chinese domestically-oriented companies, which will not suffer with more duties than Trump.

Moody's AAC Technologies (AACAY) and Alibaba compete with JD.com (JD) and Vipshop (VIPS) as examples of companies to keep well.

But how healthy is the Chinese consumer?

Investors will have a better feeling when Alibaba reports earnings on Friday morning. Analysts expect sales to grow by more than 55% over a year ago – a sign that Chinese consumers are still spending even before a slowdown in the economy.

Executive Chairman Alibaba Jack Ma this week recognized the commercial problems in his annual letter to shareholders.

"Recent developments in the global economy have been in a state of turmoil as uncertainties dominate trade relations, consumer trends, stock markets and the manufacturing industry.

However, he remained optimistic that Alibaba will remain a world leader in technology, despite geopolitical problems, saying "Alibaba is well positioned because we are experienced in coping with adversity."

"This is the third time in Alibaba's 19-year history that we faced a failure in the global economy, but previous experience tells us that there are tremendous opportunities behind stress and friction," he wrote.