At the recent 51st Tsinghua University Forum on China and the World Economy, held online, Ming Ming, the chief economist at CITIC Securities, shared his perspectives on current market dynamics and asset allocation.
He noted that the most striking feature of this year's capital markets is the extreme divergence between technology and traditional sectors. This K-shaped trajectory reflects both the ongoing artificial intelligence industrial revolution and deeper structural adjustments within the global economy. From the United States and Japan to South Korea and China, technology assets have generally performed strongly, while traditional industries continue to face pressure. Consequently, the actual gains felt by investors have been significantly weaker than what the broader market indices might suggest.
Looking ahead to the second half of the year, Ming Ming believes the core challenge for investors is navigating the key contrasts between "technology versus tradition" and "growth versus dividends." The market is currently maintaining high activity with daily trading volumes exceeding three trillion yuan, indicating robust liquidity. Should a new direction with clear certainty emerge—whether a shift from high-valuation growth stocks to dividend-paying value stocks or a rotation among sectors—the market could rebound very swiftly.
Regarding Federal Reserve policy, he offered a unique observation. He suggested that while the new Fed Chair, Waller, maintains a hawkish rhetoric, his actual actions are creating room for flexibility—evidenced by actions like abstaining from a vote on interest rates and adjusting inflation measurement metrics. Therefore, Ming Ming judges the probability of an actual rate hike in the latter half of the year to be relatively low.
On the topic of asset allocation, he expressed the view that real estate has largely reverted to its fundamental role as housing and is no longer suitable as an investment vehicle.
Specifically concerning gold, Ming Ming stated that the future upside for gold trading is not optimistic. From a trading perspective, he described the market as excessively crowded.
He referenced Warren Buffett, noting that gold is a unique asset whose primary issue is that it does not pay interest. Holding gold relies solely on capital appreciation; its price must rise daily, otherwise the opportunity cost of holding it is the loss of potential interest income. "If the Federal Reserve maintains a relatively high interest rate environment," Ming Ming said, "I believe holding a large quantity of gold entails significant financial costs. Purchasing a small portion as a safety reserve is acceptable, but holding substantial amounts is costly."
Comments