Tariff worries may have rattled global investors, but analysts still hope that China’s technology sector is riding a wave of interest in homemade generative artificial intelligence this year. Salvo, the latest in US tariffs on China and its Southeast Asian trading partners, fell over Chinese stocks, which were published on Thursday, but they closed their lows well. The local market closed on Friday during the holiday. “Despite some initial reaction, large-scale technology names (and most consumer names) have limited exposure to the US market,” said Kai Wang, Asian equity strategist at Morningstar. “We look forward to fiscal policy intervention,” he said. China’s Treasury Ministry last month showed that it retains some dry powders, taking into account domestic and international uncertainties. Chinese policymakers are scheduled to hold regular meetings later this month. China’s tech stock valuation remains cheaper than US stock prices, City China equity strategist Pierre Lau and his team said in a report Thursday. They pointed out that the average price-to-earning rate for the seven major technology-related Chinese stocks is 52% below our “magnificent 7.” “We prefer domestic export play amidst the uncertainty caused by higher tariffs,” the City strategist said. They also prefer services over the product sector and grow beyond value. The company is overweight in China’s internet, technology and transport equity sector. City’s top China Stock purchases include social media and gaming company Tencent, electric vehicle giant BYD, and home appliance company Haier. All listed in Hong Kong. As investors’ interest increases in signs of how much interest is growing, nearly a quarter of international investors are becoming more positive with Chinese technology, Citi strategist said last month that he cited the company’s US marketing efforts. According to the EPFR, in late March, the allocation of global emerging market equity funds to China reached a 16-month high in late March. Chinese startup Deepseek released an AI model in late January claiming it would surpass Openai’s ChatGPT despite US restrictions on China’s access to advanced chips for AI training. The adoption of AI is also expected to help Chinese companies cut costs, but the policy aims to support consumer growth. The first upgrade to revenue expectations for Chinese companies is being driven by the high-tech sector and selected consumer companies, HSBC analysts noted Thursday. The index of 10 major Chinese tech companies traded in Hong Kong fell 1.2% on Thursday. Tech Index remains high at ages over 20% to date, compared to a below 14% increase in the Hang Seng index. Another sector investment analyst says that China’s healthcare is relatively protected from the new tariffs that it is China’s healthcare, as drugs have been removed from Trump’s latest tariffs. “Even if Trump imposes tariffs in the future, most Chinese biotechnology has US partners and are not considered exporters, and the tariffs from large drug manufacturers can easily be transferred to downstream US drugs,” Jeffrey’s equity analyst CUI CUI and his team said Wednesday. They also do not expect to revive targeted laws such as expired biosecure laws. The Biosecure Act sought to restrict Chinese pharmaceutical companies such as Wuxi Biologics from federal contracts. “Given both Republicans and Democrats support lowering US drug prices, it is essential that US pharma companies operate efficiently and provide flexibility to maintain optimal cost structure,” Jefferies analysts stressed the hope that Wuxi Biologics can operate at least twice more efficiently than their competitors Samsung and Lonza. Hong Kong-listed Wuxi Biologics said in late March it hopes to “accelerate and profitable growth in 2025.” Jeffries bought the shares. However, the extent to which the new US tariffs and the impact on the Chinese economy remains unknown. The King of Morningstar warned that tariffs would indirectly affect the high-tech sector as they are likely to have a negative impact on China’s gross domestic product, but warned that market volatility could increase.
