US stocks drop, China stocks surge since 2025 began: Where should investors put their money?

Dubai: Global stock markets have been moving sideways this year. Gains in some regions are being offset by losses in others, leaving investors struggling to find solid returns. As uncertainty looms, many are shifting toward safer investments, avoiding risky assets amid concerns over economic policies and market volatility.

Winners and Losers

As of March 17, 2025, stock markets around the world are showing mixed performance.

· US stocks are sliding, with the S&P 500 down over 10% from its February peak. Fears of a slowing economy, tightening financial conditions, and wavering consumer confidence are driving this decline.

· China’s markets, on the other hand, are thriving. The Hang Seng Index has surged 20% this year, powered by strong economic data and government-led initiatives to stimulate growth. Industrial production is up 5.9%, and retail sales have climbed 4% year-over-year, signaling resilience in China’s economy.

What’s behind the shift?

The US is grappling with economic uncertainty, while China has rolled out aggressive policies to boost consumption and stabilize its stock market. Investors are now weighing whether to stay put in the US or look for better opportunities elsewhere.

How investors can adapt

· Assess economic policies: China’s government-backed stimulus measures are fueling confidence in domestic markets. Meanwhile, US trade tariffs and monetary tightening has raised concerns about slower growth and market volatility.

· Compare market valuations: Chinese stocks, particularly in government-supported sectors, present attractive growth prospects. The US market remains turbulent, making careful stock selection crucial.

· Diversify strategically: Instead of relying on just one market, investors should consider spreading their risk across different asset classes and regions.

Will a market crash happen?

Stock market corrections—declines of 10% or more—are a regular occurrence. Since World War II, the S&P 500 has gone through 22 bear markets (20% declines), averaging one every 3.5 years. Corrections between 10% and 20% have happened 15% of the time in 12-month periods since 1973.

Historically, these downturns don’t last long, typically running for about three to four months. Even major crashes, like the 2020 COVID-19 drop of 37%, eventually gave way to strong rebounds.

Get the right investor mindset

Legendary investor Benjamin Graham once said, "I know less and less about what the stock market is going to do, but I know more and more about what investors ought to do." His advice still holds true today—focus on your long-term goals rather than trying to time the market.

What’s the smart move now?

While some investors panic, smart ones see corrections as opportunities. Falling stock prices mean once-expensive stocks are now more affordable. If you’ve been waiting to buy into strong companies, now might be the time.

With inflation concerns and rising interest rates adding to market pressure, investing wisely is more important than ever. Staying informed, diversifying your portfolio, and maintaining a long-term perspective will be key to navigating this uncertain landscape successfully.