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(Bloomberg) — Chinese stocks climbed for a second day, bucking a worldwide selloff, amid growing speculation that authorities will roll out stimulus to shield the economy from Donald Trump‘s tariffs.
A closely watched gauge of Chinese stocks in Hong Kong (^HSCE) ended 1.4% higher after sliding more than 4% earlier. The onshore CSI 300 (000300.SS) Index closed up 1%.
The moves came as investors shifted their attention to the likely response of Chinese authorities after US tariffs as high as 104% took effect Wednesday. China’s top leaders are planning to meet to discuss measures to boost the economy and stabilize capital markets, Reuters reported Wednesday, citing people with knowledge of the matter.
“With the tougher tariffs announced, markets are expecting more government stimulus to boost consumption,” said Kenny Ng, a strategist at China Everbright Securities International. That has encouraged investors to scoop up consumer-driven stocks during the current rally, he said.
Mainland Chinese investors bought an unprecedented HK$35.6 billion ($4.6 billion) worth of stocks in Hong Kong on Wednesday. Onshore buyers appear to be unperturbed by the escalating tariff tensions, plowing in more than HK$115 billion since April 2, when the US unveiled the sweeping tariffs.
Chinese technology companies were among the most popular stocks during the Wednesday rally. Chipmakers Semiconductor Manufacturing International Corp. (0981.HK) and Unigroup Guoxin Microelectronics Co. (002049.SZ) soared, buoyed by expectations of AI-related demand. Smartphone maker Xiaomi (1810.HK, XIACY) closed up 7.7%, its best day since August.
Duty-free store operators, which are spared from import taxes, also emerged as big winners. Shares of China Tourism Group Duty Free Corp. jumped 24% in Hong Kong trading.
The damage to Chinese companies’ earnings from US tariffs is likely to be smaller than the hit to the wider economy, according to Morgan Stanley strategists. Companies in the MSCI China index get only around 3% of their revenue from the US, they wrote in a note.
The US tariff on Chinese goods was increased after Beijing retaliated to an earlier announcement. The tit-for-tat moves has raised the specter of a prolonged period of trade tensions that could badly hurt both economies — increasing the importance of a big stimulus push.
“With this trade war, the urgency will be even stronger for them,” said Elizabeth Kwik, investment director of Asian equities at Aberdeen Investments. “It is already the direction that they were going in anyway, but it’s more like a catalyst to speed up and to take some quicker action.”