A screen in Shanghai shows Chinese stock indexes on April 9 after China said it would impose 84 percent tariffs on U.S. imports.
HECTOR RETAMAL/AFP via Getty Images
Chinese stocks rose on Thursday, even though U.S. President Donald Trump hiked tariffs on the country to a towering 125%. Some investors found hope in Trump’s decision to “pause” big duties on other trading partners, because China may be able to make products in them to ultimately sell to America.
The 90-day reprieve on higher levies on goods from other countries announced Thursday is good for clothing billionaire Ma Jianrong and electronics billionaire Pan “Benjamin” Zhengmin, analysts say. Shares in Ma’s Hong Kong-listed garment maker Shenzhou International, which has customers like Nike and Adidas, surged as much as 12.5% in trading Thursday morning. Pan’s Hong Kong-listed electronics maker AAC Technologies, an Apple supplier, saw its shares rise as much as 23%.
Those companies’ stock market performance far outpaced the Hang Seng Index’s 1.3% gain as of 11:45 am Thursday. On mainland bourses, the CSI 300 index tracking stocks listed in Shanghai and Shenzhen rose 1% around the same time.
These gains came as Trump signaled he is willing to negotiate with trading partners that haven’t retaliated with their own tariffs, which led U.S. markets to soar overnight and investor optimism to rise on other Asian markets including Japan and South Korea. Trump’s reprieve covered many countries in Southeast Asia, where Chinese companies including Shenzhou and AAC have set up plants to avoid American duties on products directly sourced from China.
“The reciprocal tariffs have been paused,” Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities, says by WeChat. “Shares of Chinese companies that have factories in Southeast Asia previously plunged because investors thought they couldn’t reroute exports anymore. But now the losses have been pared.”
Yet despite the temporary relief, future growth is far from certain amid a very cloudy macro-economic outlook. Charu Chanana, Singapore-based chief investment strategist for Saxo Bank, says by email that investors are hopeful China will stimulate its economy to cushion the impact from Trump’s tariffs. Meantime, hopes for a China- U.S. trade deal resurfaced after the American president suggested on Thursday that duties on Chinese imports may have peaked.
China’s top leaders will reportedly meet on Thursday to discuss new stimulus measures including support for consumers and technological innovation, according to Bloomberg. But many analysts don’t expect a trade deal soon.
In a tit-for-tat move, Chinese President Xi Jinping hiked levies on U.S. goods to 84%. “While Trump is acknowledging that tariffs are negotiable with countries, it would seem that he is not giving any wriggle room for China,” Peter Kim, Seoul-based managing director of KB Securities, says by email.
Trump may be waiting for China to climb down first, as the American leader has said he is waiting for a phone call from China to start negotiations. But Guo Shan, a Shanghai-based partner at research firm Hutong Research, says by WeChat that Xi is quite unlikely to make the first move.
Doing so is “politically untenable,” Guo says, as any gesture from Beijing risks making the Chinese leader look weak. On Tuesday, Chinese officials vowed to “fight to the end” as the U.S. escalated tariffs. State-affiliated funds were mobilized to buy domestic shares and prop up the stock market.
“In the immediate future, we expect Beijing to prioritize stabilizing the domestic financial markets, and it is also likely to expedite the implementation of certain planned supportive measures,” Nomura analysts wrote in an April 10 research note, without specifying what measures might be considered.
