We’ve hit peak US exceptionalism. As Wall Street optimism fizzles, investors are reducing their US exposure in record numbers and are setting their sights elsewhere. Positive moves in China mean the land of the rising sun has now become the land of the rising stock market. Global traders are also eyeing a revitalised Germany, which is good news for Europe.
Peak US exceptionalism
A recent Bank of America survey shows that investors are slashing their US equity holdings by the most on record. Fund managers reported being about 23% underweight in US stocks in a dramatic shift that shows how quickly traders have lost their optimism about American markets, with the S&P 500 (VOO-NASQ) some 8% down from an all-time high in February. Quoted in a Bloomberg article, strategist Michael Hartnett wrote: “Peak US exceptionalism is reflected in record rotation out of US stocks.” High valuations and tepid economic growth in the US have made investors jittery.
Investors look east
As US stocks tip into correction territory, global investors are hunting for opportunities elsewhere with Chinese and Japanese equities among the beneficiaries in recent weeks. Investors are warming to the market-friendly messaging from Beijing and a pivot by China to stoke domestic consumption would make the economy less vulnerable to tariffs. Clarity offers investors multiple ways to gain exposure to China’s market, with the iShares China Large-Cap ETF (FXI-NASQ) and iShares MSCI China ETF (MCHI-NASQ).
Beware the China shock
While some investors warm to the rising potential for returns in China, strategists at Bank of America Securities are warning that the country’s stock rally may face a “meaningful correction soon” given its similarities with the 2015 boom and bust cycle. Bloomberg reports that the Hang Seng China Enterprises Index (HSCEI) and the MSCI China Index (MCHI-NASQ) have both surged at least 30% from mid-January lows, which is similar to the pace of gains seen in 2015 before the market plummeted. Having peaked in May 2015, the HSCEI tumbled nearly 50% through February the following year and is yet to reach that level again.
Ready for lift-off!
German budget austerity has ended, which has investors excited. Without the debt brake, Germany now has access to hundreds of billions of euros for defence and infrastructure spending. This capital should deliver a serious and much-needed stimulus injection to Europe as the country plans to focus on European-made gear, rather than American equipment. This spending should balloon if there is a peace deal in Ukraine. When you add accelerated deregulation, depressed valuations and a real lack of ownership, this could be a multi-year rocket for investors! Bloomberg reports that traders are also bullish, building up positions in German mid-cap companies for the first time in years due to the potential for a rally in the relatively cheaper sector.
Big tech switcheroo!
Big tech in China and the US are having a reversal of fortunes. Mag 7 stocks remain under pressure after shedding another -2.5% to hit their lowest level since September, with Nvidia (NVDA-NASQ) falling -3.5% and Tesla (TSLA-NASQ) again the worst performer (-6%). The EV stock is now down -44% for the year. In contrast, Chinese tech shares have enjoyed a strong rally in recent weeks. CNBC reported that the Hang Seng Tech Index, which tracks some of the largest Chinese technology companies listed in Hong Kong, has risen over 30% since the start of the year, according to data from LSEG.
Tencent tumble
Hong Kong-listed shares in Prosus (PRX-JSE) and Naspers (NPN-JSE)-owned Tencent dropped as much as -4.1% after China’s most valuable company announced its results. The weakness stemmed from its AI capital spending plans, which were less aggressive than some expected, and Tencent’s target to repurchase HK$80 billion or more worth of shares in 2025, which is down some to HK$32 billion from the amount repurchased in 2024. On a positive note, quarterly revenue exceeded estimates at 172.5 billion yuan, while income almost doubled.
China auto dominance
Chinese carmakers are gaining market share globally, especially in emerging markets, with sales of inexpensive compacts, crossovers, and SUVs. Bloomberg expects global market share for Chinese automakers to climb to 13% in 2030, with a projected 39% share in Africa and the Middle East, which poses a threat to traditional automakers like Ford (F-NASQ), General Motors (GM-NASQ), and Toyota.
Remgro surges
Remgro (REM-JSE) shares surged as much as +7.7% in the stock’s biggest jump since June after a strong trading update. Profit in the first six months of 2025 will increase as much as 43%, surpassing the 24% increase projected by JPMorgan analysts. Remgro noted improved operations for most of the companies it invests in, especially financial services providers like FirstRand (FSR-JSE), Discovery (DSY-JSE) and OUTsurance (OUT-JSE). The company also lowered its finance costs.
Sector focus: Copper
Copper prices have climbed more than 23% in 2025, according to Dow Jones Market Data, breaking through the $10,000 a ton mark. President Trump’s push for tariffs on the metal is driving the surge, reports Bloomberg. “This is a round of cross-regional repricing triggered by potential US tariffs,” said Wei Lai, deputy trading head at Zijin Mining Investment Shanghai Co. “While cargoes are lured to the US, leaving other places in shortfall. Buying sentiment is very strong.”
Stock focus: RFG Holdings
While RFG Holdings (RFG-JSE) reported sales growth of only 2% due to weakness in the International unit (-19%), volume growth in SA has been very strong (+9%) and lifted local sales by almost 6%. These figures are positive as the local business accounts for more than 80% of the company’s earnings.
