On June 3, the Ministry of Foreign Affairs made two key statements to set the general direction of China’s foreign economic and trade.
On the one hand, it clearly opposes unilateral tariffs and trade wars, and advocates that China-US economic and trade differences should be resolved through equal consultation; on the other hand, it reiterates that the nature of China-EU economic and trade is mutual benefit and win-win, calling on the EU to abide by free trade and abandon trade protectionism.
The two major authoritative voices have been implemented, and the pessimistic expectations of global trade frictions that continue to suppress the market have significantly cooled down. The foreign trade industry chain has reached an expected turning point, and many subdivisions have ushered in periodic investment opportunities.
1. The core logic of the news: Global trade barriers have cooled, and export fundamentals are expected to reverse
In response to the US plan to increase import tariffs, China firmly vetoes tariff wars and trade wars, blocking the possibility of extreme trade frictions from the top level; in the face of the EU’s frequent trade protection measures, it anchors the tone of China-EU cooperation with mutual benefit and win-win, and urges the EU to abandon restrictive trade policies.
The core negative factors that have dragged down the valuation of the export sector in the past – increased tariffs in Europe and the United States and rising trade barriers have weakened, and the pessimistic logic of declining overseas orders and blocked overseas exports has been broken. The space for repairing the performance of the export-oriented manufacturing industry has been opened, and funds are expected to flow back to the export track along the main line of trade easing.
Second and three core benefit sectors, segmentation opportunities are sorted out one by one
1. New energy overseas: photovoltaic + energy storage + new energy vehicles (the core benefit line of China and Europe)
Europe is my country’s largest overseas consumer market for photovoltaics, energy storage, and new energy vehicles, and it is also a region where trade protection measures have been frequent in the past.
Under the tone of mutual benefit and win-win between China and Europe, the probability of the EU imposing additional restrictive tariffs on China’s new energy products has dropped significantly.
Photovoltaic industry chain: Manufacturers of components, inverters, and energy storage equipment are deeply tied to the demand for new energy installations in Europe. After trade protection risks are alleviated, overseas shipments are expected to pick up steadily;
New energy vehicles and parts: Domestic new energy vehicles and electric and electronic components have strengthened their logic in exporting to Europe. European localized factory construction + product exports have benefited from both, and the complete vehicle and auto parts segments have ushered in valuation restoration.
2. Home appliances and machinery and equipment: Traditional export leaders are facing a valuation recovery
White appliances, kitchen appliances, construction machinery, and general equipment are categories that are urgently needed for trade between China, the United States, and China. Europe and the United States have stable demand for home consumption and infrastructure.
Previously, the sector had been subject to tariff disturbances for a long time, which suppressed valuations. After the trade friction eased:
White appliances leaders (home appliances, refrigeration equipment) have a high proportion of overseas revenue, and North American and European orders are expected to improve;
Construction machinery and small and medium-sized machinery manufacturing companies have benefited from the global infrastructure recovery + reduced tariff risks, the inflection point of export revenue is approaching, and the cost-effectiveness of low-end manufacturing targets is highlighted.
3. Light industry consumption +
Consumer electronics: low-end export varieties usher in an opportunity to make up for growth
Textiles, apparel, household daily necessities: Domestic light industry manufacturing companies are the core suppliers of European and American supermarkets, and the sector as a whole is at a historically low valuation. After the warm trade wind comes, it will be superimposed on the replenishment cycle after the overseas consumption off-season.
Be prepared for low valuation repair logic;
Consumer electronics industry chain: Apple chain and Android chain OEM companies are deeply bound to the North American market. The cooling of Sino-US tariffs has eased the cost pressure on the industrial chain. Terminal brands are expanding production and expectations for order return are rising. Consumer electronics parts are seeing marginal improvement.
Supplementary branches: cross-border logistics, foreign trade service providers
The rising import and export trade boom will directly drive the volume of freight, freight forwarding, and cross-border e-commerce industries to increase. The foreign trade service sector, as the upstream of the export industry chain, will simultaneously benefit from the rebound in the entire chain.
3. Weak directions that need to be avoided
1. Stocks that benefit from trade barriers: a niche theme that was previously hyped by “rising tariffs forcing domestic substitution”. As global free trade is expected to pick up, the original hype logic becomes invalid, and funds are gradually withdrawn, short-term avoidance;
2.
Unpopular sectors with purely domestic demand and no overseas business: In the absence of trade policy catalysts, and after the existing funds are diverted to the main export line, the sector is likely to be unable to outperform and should be avoided first.
4. Investment strategies and risk control tips
Layout ideas
In the short term, focus on high-prosperity overseas markets such as photovoltaic energy storage and new energy vehicle auto parts. The capital sensitivity is high and the market is expected to recover.
In the mid-term, low-level export manufacturing such as home appliances, home furnishings, and machinery will be deployed at low prices to earn dual recovery benefits of performance + valuation.
Risk Warning
The content of this article is only based on public news information to sort out industry logic and does not constitute any stock buying and selling advice.
There are uncertainties such as implementation variables in international trade policies, overseas macro consumption fluctuations, and exchange rate changes. Investments need to be made rationally based on one’s own risk tolerance.
