HK-listed Chinese stocks hit 3-month high despite China, US tariffs

Hua Hong Grace Semiconductor

04/02/2025 08:52

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      Stocks rally despite new Sino-US tariffs
    

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      AI and EV shares lead the gains 
    

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      Focus shifts to China's tariff responses and upcoming NPC 
    

  
 (Updates closing prices, adds quotes)
    By Jiaxing Li
       Hong Kong, Feb 4 (Reuters) - Chinese stocks listed in
Hong Kong surged on Tuesday as investors loaded up on artificial
intelligence and electric vehicle shares while shrugging off
news of tit-for-tat Sino-U.S. tariffs on each other's goods.
        China's finance ministry announced a package of tariffs
on a range of U.S. products in an immediate response to
President Donald Trump's 10% tariff on Chinese imports that went
into effect at 0501 GMT.
    Investors had been hoping Trump would retract the proposal
to raise tariffs on China at the last minute, just as he did
with Canada and Mexico on Monday.
        However, as the deadline passed and U.S. tariffs came
into force, Beijing announced its own levies of 15% for U.S.
coal and LNG and 10% for crude oil, farm equipment and some
autos. The new tariffs on U.S. exports will start on Feb. 10,
China's finance ministry said.    
    "China is trying to get some bargaining power before getting
close to the negotiating table. It doesn't mean that they will
not go for negotiation talks," said Steven Leung, who handles
institutional trading at stockbroker UOB-Kay Hian in Hong Kong. 
    Trump's press secretary said the president will speak with
Chinese President Xi Jinping in the next couple of days
    The Hang Seng China Enterprises Index  .HSCE  closed up 3.5%
at a fresh three-month high. The Hang Seng Tech Index  .HSTECH 
surged 5.1%, and Hong Kong's benchmark Hang Seng index  .HSI 
added 2.8%.   
    The Hang Seng Index has advanced 3.6% so far this year,
outperforming major global markets including Japan  .N225  and
the U.S. S&P 500 index  .SPX . Wong Kok Hoong, head of equity
sales trading at Maybank, said investors had so far viewed 
tariffs as a negotiation strategy between the two superpowers. 
    Trump's announcement of the 10% tariff had also come as a
relief, for his threats soon after he won the election last year
were to impose 60% tariffs on China.    
    "It's the glass-half-full way of looking at Hong Kong and
China... perhaps only a 10% tariff and not the dreaded 60% from
the get-go," he said. "In a way markets may be slowly
interpreting tariffs as a negotiation tactic, and one can strike
a deal with this POTUS." 
    Beijing's initial proposal to Trump's tariffs will centre on
restoring the "Phase 1" trade deal signed in 2020 during his
first term, the Wall Street Journal reported on Monday, citing
sources.
    Leading gains on Tuesday, AI-related stocks rallied as
investors continued to pile up wagers on home-grown firms after
startup DeepSeek released a large language model at a lower
cost. 
    China's top chipmaker SMIC  0981.HK  surged 8.5% to a record
high, and peer Hua Hong Semiconductor  1347.HK  advanced 12.7%. 
    The EV sector also lifted the market, with carmaker XPeng
 9868.HK  jumping 11.8% after the company said it delivered a
nearly three-fold increase in smart EVs in January year-on-year.
    Financial markets in mainland China will reopen on Wednesday
after the long Lunar New Year holiday. China's benchmark
blue-chip index  .CSI300  fell 3% in January before the holiday,
surrendering nearly half of September's 40% rally. 
    The markets may look through the political noise to focus on
China's responses to U.S. tariffs and the upcoming National
People's Congress (NPC) meeting in the next few weeks, analysts
at Citi said in a note. 

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 (Reporting by Jiaxing Li and Tom Westbrook; Editing by Vidya
Ranganathan and Ros Russell)
 ((jiaxing.li@thomsonreuters.com +852 63358304))