Since the US announced reciprocal tariff measures on April 2, the MSCI China Index has recovered all its losses, according to a report from UBS.

Currently, the risks associated with tariffs seem to have reached a well-balanced state. The market may view the temporary tariff agreement between China and the US as a signal of warming relations between the two countries, which is expected to alleviate investors' concerns about financial decoupling between China and the US.

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Given that the most extreme uncertainties have now been eliminated and corporate fundamentals will once again become the main driving factor for stock price performance in the future, UBS raised its targets for the HSI/ MSCI China Index to 24,500/ 80 this year.

UBS also named the internet sector as its most favored sector once again in light of the sector's stronger resilience in profitability, and it expressed its current preference for H-shares over A-shares. With reduced concerns about financial decoupling, UBS predicted that AI-related investment themes may attract investors' attention again, and that domestic substitution will be another key investment theme.

Among its preferred sectors, UBS excluded essential consumer goods and favored internet, A-share TMT, and high-yield stocks, although its preference for high-yield stocks went down slightly.

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