The impact of tariffs has passed the darkest moment! Fidelity Fund bets on medium-sized stocks in China, Japan, and Germany.

George Efstathopoulos, a fund manager at Fidelity International, said that the financial markets have already seen the worst side of US President Donald Trump's tariff threats, and with the outlook improving, mid-cap stocks will become attractive buying targets. Efstathopoulos added that mid-cap stocks from Japan, Germany, and China account for about 11% of Fidelity's growth and income funds, making them among the most confident trades in that strategy. In contrast, about 18 months ago, Fidelity's holdings in such stocks were "very limited." "With the arrival of liberation day, the worst impact is behind us," Efstathopoulos said. He was referring to April 2, the day the US announced the imposition of tariffs, triggering a global stock market downturn. "The data recorded on that day was the worst." While investors are preparing for the end of the 90-day tariff truce on July 8, Fidelity is sticking to its beliefs. If countries fail to reach a trade agreement with the US by then, retaliatory tariffs will take effect. The Middle East tensions could also pose a major test for the stock market, as the conflict between Israel and Iran escalates and Trump considers whether to strike Iran within the next two weeks. Currently, many of Efstathopoulos' bets have paid off, and he believes these stocks still have potential. The MSCI Japan mid-cap index has risen by over 4% since April 2, while the German DAX mid-cap index has risen by nearly 6%. Similar indices in the Chinese stock market have risen by about 0.5% during the same period. The fund management company has been holding some Chinese and Japanese stocks since the second half of last year, and purchased German mid-cap stocks in March shortly after the German government announced a historic spending plan. Efstathopoulos said, "In a world disrupted by trade and globalization, I think it makes sense to focus on domestic income generation." He believes that the German stock market is likely to rise, as it will benefit from the German government's shift towards increasing fiscal spending and focusing on domestic demand in a landmark move. Meanwhile, Efstathopoulos said that Japan is experiencing a once-in-a-generation shift, with "benign inflation" sweeping through the economy, and mid-sized companies may benefit most from domestic consumption growth. Fidelity is optimistic about Chinese companies, as China may introduce further fiscal stimulus measures and the risk of losses is limited, partly due to government-backed investors entering the market to support stock prices.