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The Chinese National Flag enters the financial area of Lujiazui in the background.
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Financial institutions rethink their Chinese calls after an unexpected trading truce between Washington and Beijing, enhancing both the country’s growth and the prospects for the stock market.
On Monday US and China reached the agreement Temporarily stop most tariffs for each other’s products for 90 days. According to the transaction, mutual tariffs will be reduced from 125% to only 10%.
This means a significant softening of tensions between the two countries after the tatta, which took place on April 2 after the US President Donald Trump is “mutually”, which led to the banks to reduce their growth forecasts.
Now several institutes are reviewing their predictions in China.
At the end of Monday, UBS said GDP growth in China in 2025 could rise to 3.7%to 4%, which compared to the previous basic case 3.4%, given how de -escalation in the trade war could lead to a “smaller shock” to China’s economic growth.
Morgan Stanley also rose to his closest quarterly GDP forecasts about expectations that companies could try to speed up exports to use the lower tariffs.
“While the tariffs remain elevated, the suspension window can lead to transmission and production,” the investment bank analysts write in the note. Chinese GDP in the second quarter may come higher than in the current 4.5%estimate, the report was written by Chinese Chinese economist Robin Sing and others.
In addition, Xin and his team are now expecting the growth in the third quarter to show temporary stability by predicting it above 4%. Previously, Morgan Stanley said the growth could mitigate about 4%.
Currently, Anz Bank sees that China’s GDP exceeds 4.2% this year, after the elderly bank in Australia has revised the forecast to 4.2% from 4.8% in April.
Similarly, Natixis sees GDP growth by 4.5%this year, which is 4.2%compared to the basic case, if there is a more active stimulus and a further decrease in tariffs. This happens after a French bank In early April, China’s GDP has reduced its GDP to 4.2% of 4.7%.
Cautious optimism
Optimism in growth prospects is to improve the forecast of Chinese shares.
Nomura raised Chinese shares to “tactical overweight” and turned some funds from its position in India to China, the note said after trade negotiations.
Citi raised its goal for the Hang Seng index by 2% to 25,000 by the end of the year, and expects it reached 26,000 to the first half of 2026.
However, Citi Pierre Lau’s own capital strategist said he prefers internal plays that avoid tariff uncertainty. He updated the consumer sector with neutral to overweight. Lau also emphasized the sector of the Internet and the country’s technology as promising.
“We see an attractive reward for the risk in China’s stock with a market assessment that remains unpretentious,” said Eddie Loch, Chief Investment CEO, who sees opportunities in communications and some discrete consumer sectors.
William Ma, Chief Investment Director of the Grow Investment Group, which is usually Bull in China, suggests that a rebound in Chinese markets is a sustainable rating, especially with a recent Chinese policy and a stimulus that may offer an additional incentive for the China economy and markets.
The Chinese CSI 300 was slightly higher on Tuesday after an increase in 1.6% at the previous session. The Hong Kong Seng Seng Seng index rose by almost 3% on Monday, but fell 1.5% on Tuesday.
Some experts warn that it does not admire what may be a tactical refusal in promotions.
Although the US-Kita trade talks were better than the markets expected, the agreement was still temporary and subjected to further change, Loch said.
It does not change the bigger picture. China’s stock market is still dependent on the internal bases that remain weak.
The 90-day decrease in tariffs and breaks does not guarantee transactions, especially given the deterioration of mutual trust between the US and China, said the elder economist Natsis Harry NG.
The markets were united because the results of trade conversations were unexpected and not at the price, Chinese director Eurasia Dan van said.
“It does not change the bigger picture. China’s stock market is still dependent on the domestic bases that remain weak,” she said CNBC, citing a decline in the real estate sector and enhancing local self-government debt, which also makes the sector depend on the state’s support.
Van added van, which views tariffs as the main thing in its political impact against China, cannot keep the tariffs low.
“This is a temporary pause, not a breakthrough in bilateral relations. The 90-day truce in the diplomacy of trade,” she said.
– Evelyn Chang Evelyn Chenc introduced this report.
