China, Japan markets look attractive as US exceptionalism wanes: BlackRock

In 2025, BlackRock suggests investors consider Japan and China for stock returns as US markets face challenges from trade wars and economic uncertainty. Despite the US market's struggles, BlackRock remains overweight on the US but acknowledges threats from tariffs and rising yields. Japan's corporate reforms and mild inflation have improved earnings prospects, with Japanese firms achieving high profitability. However, a stronger yen could impact earnings. Meanwhile, China's tech advancements, particularly in AI, have boosted the Hang Seng index, though the country still faces tariff risks and macroeconomic challenges.

BlackRock is modestly overweight on China, noting the government's efforts to stabilize the tech sector after previous regulatory crackdowns. While US stocks may see a revival, with Morgan Stanley predicting a potential rally led by the Magnificent Seven, BlackRock continues to bet on US upside from AI and earnings growth. However, risks such as rising bond yields and global trade tensions remain.

Key takeaways

BlackRock recommends investors consider Japan and China as alternative markets due to US market struggles in 2025.
Japanese companies have shown improved earnings outlooks, with corporate profitability reaching a four-decade high.
China's tech sector, particularly in AI, has driven significant gains, although the country faces tariff risks and macroeconomic challenges.
Despite challenges, BlackRock remains overweight on the US market, anticipating growth from AI and earnings expansion, but warns of risks from rising bond yields and trade wars.

China, Japan markets look attractive as US exceptionalism wanes: BlackRock

Key takeaways

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