Chinese Stocks Take Tariff Blows in Stride With All Eyes on NPC

(Bloomberg) -- Chinese stocks posted humble losses arsenic Beijing’s measured effect to US tariffs eased contiguous interest astir a full-blown commercialized war, with investors looking to a cardinal governmental gathering to prolong a caller rally.

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A gauge of Chinese shares listed successful Hong Kong ended Tuesday down 0.6%, having fallen arsenic overmuch arsenic 2.5% aboriginal successful the day. The onshore benchmark CSI 300 Index slipped little than 0.1%.

Market absorption was comparatively muted arsenic Beijing unleashed a flurry of retaliatory measures successful effect to higher US levies, which took effect mid-day successful Asia. China imposed tariffs arsenic precocious arsenic 15% connected US exports, but kept the absorption connected cultivation products. Policy hopes up of China’s National People’s Congress meeting, which starts Wednesday, whitethorn person besides helped avert a bigger selloff.

“China’s hit-back isn’t precisely assertive — a 15% tariff connected US cultivation goods, but thing broad-based connected tech oregon autos, suggests to maine they’re leaving country for negotiation,” said Billy Leung, an concern strategist astatine Global X ETFs. “That’s astir apt wherefore Chinese stocks are rebounding alternatively of selling disconnected harder.”

Read: Trump’s China Tariffs Seen Dulling Positives of NPC: Analysts

The result of the NPC volition person greater value successful the aftermath of heightened Sino-American tensions. Policymakers are expected to propulsion China’s authoritative fund shortage people to its highest level successful implicit 3 decades astatine the meeting, pumping trillions of yuan into a strategy battling deflation, a spot clang and the US commercialized clash.

Concerns implicit US tariffs person taken a backseat among Chinese banal investors truthful acold this year, arsenic optimism implicit DeepSeek drove a world-beating rally successful tech shares. The Hang Seng Tech Index — whose members see Chinese heavyweights Alibaba Group Holding Ltd. and Tencent Holdings Ltd. — has precocious astir 24% this year.

“Tariff hazard is little of a absorption for Chinese banal investors compared to home argumentation and AI advancement,” said Vey-Sern Ling, managing manager astatine Union Bancaire Privee. “The caller rally successful Chinese stocks is mostly wrong the tech assemblage and is driven by the realization of AI worth alternatively than macro factors.”

The market’s resilience, however, could rapidly falter should Trump deed backmost again with adjacent stronger restrictions. A selloff seen past Friday, erstwhile the US president threatened the levy that came into effect connected Tuesday, underscores however easy sentiment tin beryllium hit.