Europe and the China Dragon

China is capturing significant market share in European manufacturing, creating competitive pressure for specific sectors like Autos and Chemicals. However, European equity markets demonstrate resilience due to significant sector rotation toward Technology and Utilities.

Key Takeaways

• 1.China is aggressively gaining manufacturing market share in Europe, driven by cost advantages and over-capacity, which negatively impacts European exposed sectors.
• 2.European indices are less vulnerable than perceived due to a shift in market capitalization toward tech hardware and renewables rather than traditional auto/manufacturing.
• 3.European authorities are expected to adopt a dual-track strategy of targeted tariffs and diversification policies rather than blanket protectionism.

Table of Contents

• Q&A on Europe Equity & the China Dragon – A fiercer fight
• 1. Is China continuing to take share in Europe, and in third markets?
• 2. What are the drivers?
• 3. Who is most exposed to China competition; how have they performed?
• 4. Is the weakness now well priced?
• 5. EU policy-makers are starting to focus on the threat posed by low-cost China manufacturing to Europe's industries.
• 6. How about innovation and investment?
• 7. How about companies selling into China?
• 8. How exposed are European equities?

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