Us stocks tumbled overnight, with the tech-heavy Nasdaq index closing more than 10 per cent below its record high set in November on Wednesday, confirming a correction, which is down 9.5 per cent so far this year.

For months, the market has been digesting expectations of a rate hike, and 40% of the Nasdaq composite index has revised down 50% or more.

Morgan Stanley analyst Michael Wilson predicted this week: although this year's most expensive stocks have been revised downwards, but the median stock (median stock) is still high, the stock market valuation will fall further. The basic hypothetical year-end target for the S & P is expected to be 4400, with a median forecast of about 4800-4900. If the policy is more aggressive, the s & p 500 may even revise down 10-20% in the first half of this year.

Jeremy Grantham, co-founder of GMO, who has been hailed as a master of value investment, warned in a report released on Thursday that the US stock market is in the fourth "super bubble" in the past century. He is confident that the bubble will burst, as it did during the Wall Street crash of 1929, the bursting of the dotcom bubble in 2000 and the financial crisis in 2008, bringing the market index back to statistical normality and perhaps even falling further.

If U. S. stocks continue to fall, how should the capital be distributed?

Chinese stocks outperformed the Nasdaq and US tech giants this year, and Wall Street called China a safe haven

HSBC, which has long held an "overweight" rating on US stocks, also said recently thatEmerging markets, especially China, may be a better "safe haven" for investors to escape the storm triggered by hawkish policy changes at the Fed.

Max Kettner, its chief diversified asset strategist, downgraded US stocks to "neutral", predicting that the weak economic recovery, the inability of fiscal stimulus to land, overly optimistic growth expectations for the US, high inflation, tight supply and hawkish central banks would make the risky asset environment particularly "harmful" in the first half of the year, while China was in a "completely different stage of the growth / liquidity cycle".

As of Friday, BABA had surged 17% in the past 11 trading days, with individual investors being its strong buyers. JD.com had his best weekly performance in nine weeks.

Analysts generally point out that a key factor in supporting Chinese technology stocks is China's active monetary policy. On Thursday, five-year LPR fell for the first time in 21 months, cutting 10 basis points to 3.70% in one year, which will lead to lower interest rates on corporate financing and personal housing loans.

Jim Reid, a strategist at Deutsche Bank, believes that China's monetary policy support measures have improved investors' risk appetite, usually in favor of high-growth stocks such as BABA and JD.com.

China's interest rate cut will help boost growth in Asia, according to a Vital Knowledge study. Axel Botte, a strategist at fund management group Ostrum, also sees the PBoC's move as a stabilizing force during the recent sell-off in global stock markets.

Bank of America: funds are flowing from US stocks to A shares; Goldman Sachs Group is bullish on both A shares and H shares

On Friday, US Eastern time, Bank of America Corporation released his weekly cash flow report, showing that US stock market money is flowing into Chinese and emerging market stocks. Emerging markets have seen their biggest weekly inflows since March 2021, reaching $5.2 billion, while Chinese stocks have also seen large inflows. On the other hand, the US stock market saw its first capital outflow in four weeks.

Goldman Sachs Group also said earlier that the opening up of China's capital market and the strong momentum of reform have made the A-share market more valuable and accessible to international investors.

Against this background, Goldman Sachs Group expects that international investors will continue to pay attention to and add A shares in 2022, and the net purchase of northward funds for the whole year is expected to reach 75 billion US dollars, or about 480 billion yuan.

"A shares are a large, liquid and growing asset class that is underallocated [by international investors]. We believe that A shares are a strategic investment asset class that cannot be ignored for global equity investors; we believe that H shares provide attractive tactical upside opportunities. In 2022, we still recommend high-end A-shares and H-shares. Goldman Sachs Group stressed.

The European market has also become popular.

In the face of the recent decline in U. S. stocks, SoFi Chief Investment Officer Liz Young believes that "Europe is a good choice."

Energy giants BP and Royal Dutch Shell, as well as big European value stocks such as financial groups HSBC and Allianz, rose sharply in 2022. The four companies trade at less than 11 times expected earnings for the coming year, far lower than US high-priced stocks such as NVIDIA Corp (49 times) and Tesla, Inc. (100 times).

Analysts at UBS share the same view, saying last week that the make-up trade in undervalued cyclical stocks prompted them to advise clients to give European stocks "overweight" relative to US stocks in their portfolios.

UBS also noted that US stock valuations are historically high and expensive relative to other stock markets, and that it is difficult for US stocks to keep growing in the face of rising interest rates, taxes and regulation. In addition, higher interest rates can bring benefits to international markets that are more value-oriented.

Of course, some people take a different view that the cycle of value stocks in January may be short.

Emmanuel Cau, a strategist at Barclays, said: "European stocks are doing pretty well at a time when US stocks are falling. But we believe that, given the strong profitability of the US market, there is no point in diversifying outside the US. "

If US stocks continue to fall, how will you lay out?

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