China Stocks Fluctuate as Investors Await Clarity on US Tariffs

China’s stock market experienced slight declines amid choppy trading on Tuesday. Meanwhile, Hong Kong shares saw a modest increase, with investors seemingly hesitant to make substantial moves pending further clarification on the United States’ tariff strategies and their potential consequences for the Chinese economy.

Mixed Performance in China Stocks Amid Factory Slowdown

During the midday trading session, the Shanghai Composite index recorded a marginal decrease of 0.03%, settling at 3,287.45.

The blue-chip CSI300 index in China also edged down by 0.13%. Within this index, the financial sector sub-index fell by 0.27%, while the consumer staples sector experienced a decrease of 0.53%. Conversely, the real estate index showed a gain of 0.18%, and the healthcare sub-index rose by 0.12%.

In Hong Kong, both the Hang Seng Index and the Hang Seng China Enterprises Index registered increases of 0.12%.

Technology stocks spearheaded the gains in Hong Kong, with the Hang Seng Tech index climbing by 0.8%.

Tariff Tensions and Economic Decoupling

Investor sentiment remains cautious due to the ongoing tariff dispute between the world’s two leading economies.

US Treasury Secretary Scott Bessent stated that it is up to China to take steps to de-escalate the situation regarding tariffs. This statement follows a series of conflicting signals regarding the advancement of trade negotiations.

China is currently refraining from implementing new stimulus measures, opting to maintain stability while anticipating a shift in stance from Washington in the prolonged trade conflict.

Market Resilience and the Need for Stimulus

According to Nicholas Yeo, head of China equities at Aberdeen Investments, the increasing likelihood of economic decoupling has contributed to the relative resilience of Chinese markets compared to other global indices.

Yeo noted that this resilience is supported by factors such as light positioning, low valuation, and ongoing government support. However, he emphasized that additional stimulus measures are necessary to facilitate a re-rating of the Chinese market.

Market analysts have also pointed out that trading volume is reduced due to the holiday season. The Mainland China market will be closed starting May 1st for a five-day Labour Day holiday.