Chinese stock investors are being advised by UBS Global Wealth Management to adopt a defensive strategy due to weak consumption and potential market volatility caused by potential tariff increases under President-elect Donald Trump.

Eva Lee, head of Greater China equities, has emphasized the attractiveness of stocks with dividend yields exceeding 6% in sectors such as banks, utilities, and energy. These stocks have a 4% yield gap compared to government bonds.

The CSI 300 Index has experienced a challenging start to 2025, declining 2.9% on Thursday, which is the worst beginning of a year in almost a decade. Traders remain cautious about economic uncertainties as the inauguration approaches, despite previous stimulus measures providing some market support.

The Chinese government has expressed its readiness to implement additional fiscal stimulus to mitigate the effects of tariffs, although concerns persist about the speed and effectiveness of these measures. In order to bolster trade-in programs for consumer products and major projects, the government plans to issue more ultra-long special treasury bonds in 2025. Additionally, the 10-year government bond yield has fallen below 1.6% for the first time, reflecting growing economic concerns and expectations for further monetary easing.