A man looks at a screen showing the movement of China’s stock market as he uses his mobile phone in Beijing on April 7, 2025.
Wang Zhao | Afp | Getty Images
Chinese stocks may rebound after this week’s heated meeting between US President Donald Trump and Chinese President Xi Jinping, with investors saying the summit could ease trade tensions and revive momentum, particularly in the country’s faltering technology stocks.
Analysts at Goldman Sachs said talks are expected to focus less on trade and export controls, including tariffs, semiconductor restrictions and rare earth exports. The bank said it expects China to agree to buy more US agricultural products, energy and aircraft to avoid rising tariffs.
While Goldman doesn’t expect “massive” sweeping gains, he said the rally could still serve as a “strategy to strengthen the Chinese yuan and Chinese figures.”
Dong Chen, chief investment officer at Bank J Safra Sarasin, viewed the conference as a near miss for Chinese business, especially after months of underperformance compared to US tech peers riding the artificial intelligence boom.
Although the markets don’t seem to have “very high expectations” for the meeting, Chen said investors are very happy. The fact that Trump and Xi were already meeting sent a “good signal,” he added.
The prospect of a limited thaw in the relationship is particularly important for Chinese technology assets, which remain hampered by US chip export restrictions. It also comes as global investors continue to pile into AI-related trades, particularly in South Korea and Taiwan.
Access to the latest Nvidia chips… is very, very important for Chinese players to compete on the world stage.
Jiong Shao, China Internet analyst at Barclays, emphasized that “the most important competitive arena today, especially between the US and China, is in AI, and the biggest bottleneck today in AI is compute.”
“The secret weapon, or the secret weapon of the US AI players, is access to Nvidia chips, which the Chinese companies don’t have,” he said.
That made Nvidia CEO Jensen Huang’s presence in Beijing alongside Trump particularly notable for investors watching the AI race, he explained.
“Access to the latest Nvidia chips… is very, very important for Chinese players to compete on the world stage,” Shao said.
Shortly after Trump met with Xi, Reuters reported that Washington had suspended sales of Nvidia H200 AI chips to major Chinese technology companies, three people familiar with the matter said. About 10 Chinese companies include Alibaba, TencentByteDance and JD.com to the potential success of China’s AI industry.
Investors are also warming to China’s AI ecosystem after recent gains from companies like Alibaba again Tencent The proposed cloud and AI-related demand was growing rapidly.
Shao said investors were initially skeptical that the massive AI spending by global tech companies would bring profits. Sentiment changed after major US hyperscalers posted strong growth.
“Now, investors are starting to see returns from their capex,” he said, adding that China’s Internet giants may be “a few quarters behind the US in terms of capex investment.”
Investors are always cautious
Some of the rally has started to show in the markets. The Hang Seng Tech index came in about 0.5% higher on Thursday, and the range Hang Seng Index increased by 0.3%.
Year to date, the Hang Seng index is up more than 3% while the Hang Seng Tech Index is down more than 7%. The continent’s CSI 300 rose nearly 7% over the same period.
Still, these modest moves pale in comparison to the sharp rallies seen in other markets across the region, including Japan, South Korea and Taiwan.
China’s ChiNext index, often described as the country’s response to Nasdaqdown about 2% on Thursday. However, the index, which tracks continental listed companies – also known as Shares – with high exposure to the semiconductor, healthcare and new energy sectors, remains close to a record high.
“We believe that some traders are in a wait-and-see mode, taking profits and blocking their positions in case the US-China summit fails to meet expectations,” said Jeff Mei, COO of BTSE Group.
“However, it is very likely that we will see a backlash and a post-convention as Trump may give concessions to get help elsewhere.”
Still, not everyone is convinced that China’s rally will materialize without broader, stronger income growth.
“The problem with the Chinese equity market, if you look at MSCI China, for example, the problem is still profitability, right?” Chen said. “Earnings per share actually didn’t show any meaningful improvement.”
Chen also pointed out the growing disparity between mainland-listed Chinese tech and Hong Kong-listed internet companies.
“Most of the AI beneficiaries, especially in the front, are listed in A stocks, and you’re actually seeing the best performance in China,” he said. In contrast, most of the components of Hong Kong’s Hang Seng Tech Index are Internet and e-commerce companies that are not direct beneficiaries of AI.
That view confirms Goldman Sachs’ preference for nationwide A shares over Hong Kong shares.
For now, investors seem less focused on the prospect of resetting the political landscape and more on the possibility that the two sides can stabilize relations.
“At least this trade agreement should be extended,” Chen said.
