A whopping 60 per cent tariff proposed by US president-elect Donald Trump on Chinese exports could be much lower, easing the impact on corporate earnings and stock markets in Hong Kong on the mainland, according to analysts.
Pictet Wealth Management predicted US tariffs on Chinese goods will rise to 20 per cent, while BNP Paribas said they would be capped at 25 per cent.
“One of the reasons that we do not take that 60 per cent at its face value is because we think that is going to have a pretty notable impact on the US economy, especially on the inflation front,” Dong Chen, chief Asia strategist and head of Asia research at Pictet in Hong Kong, said on Thursday.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Trump’s tariff target is probably leverage to negotiate with China but not the objective, he added. It is also important to consider potential retaliation from China and other countries that are expected to be hit with additional US tariffs, he said.
Meanwhile, BNP Paribas’ chief China economist Jacqueline Rong said she envisages a 10 per cent tariff on Chinese exports later this month after Trump enters the White House and another 15 per cent in phases in the second half of the year. There is “great uncertainty over the timing, pace and magnitude of tariff positions from the US side”, she said.
Chinese exporters could divert some shipments to mitigate the potential tariff increases, she added. The bank estimated China’s exports to the US are likely to fall by about 14 per cent year on year, knocking off about 2 percentage points from China’s overall export growth.
Further upside in China’s stock markets is likely after Trump’s policy agenda is clear and Chinese policymakers’ moves emerge, said Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas.
“We anticipate some near-term profit-taking pressure, but between now and year-end, we still think that there’s enough policy tailwind to end the year on a slightly higher note,” he said.
HSBC said in a report on Thursday that “the direct impact on earnings might be more muted than feared, especially as export companies form only a small weight in Chinese listed universe”.
On the first trading day of 2025, the Hang Seng Index had its worst start to a year since 2019, falling 2.2 per cent, as uncertainties about China’s growth outlook and US interest rates gripped investors.
However, the stock market outlook should be positive, given the growing number of share buy-backs and dividend payments by Chinese companies last year.
The Hang Seng Index ended 2024 with an 18 per cent gain, snapping an unprecedented run of four consecutive years of declines, while the Hang Seng China Enterprises Index (HSCEI) surged 26 per cent last year, its best since 2009 and one of the best performing gauges worldwide.
The net cash yields – dividends and share buy-backs – stood at 5 per cent in 2024 for HSCEI companies, according to HSBC.
The high yield could attract investors to focus on Hong Kong stocks amid falling interest rates.
“We think the risk profile for mainland China equities has improved and see 21 per cent upside for the HSCEI by the end of 2025,” HSBC strategists said. “This, along with potential lower US bond yields, should also help Hong Kong stocks.”
The bank upgraded Hong Kong equities to overweight amid favourable Chinese policy measures, the city government’s initiatives to prop up the tourism and property sectors, and appealing dividend yields under the interest-rate easing cycle.
Additional reporting by Cao Li
More from South China Morning Post:
- Hong Kong stocks surrender gain on China deflation risk as Tencent snaps 6-day rout
- Chinese tech stocks suffer fresh hit as US drags Tencent, CATL into military sphere
- Chinese firms seek European base for factories amid trade tensions, tariffs
For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
