Citi analysts praised the recent agreement to significantly reduce tariffs between the U.S. and China, describing it as more optimistic than anticipated. They forecast robust gains for equities in Hong Kong and mainland China. This reduction alleviates immediate pressures on exports and GDP, paving the way for future rollbacks, especially targeting the 20% levy on China linked to fentanyl trafficking.

Major Tariff Reductions

• U.S. Tariffs on China now at 30%, down from 145%.

• Chinese Duties on U.S. Products have decreased to 10%, from 125%.

• The potential elimination of the 20% fentanyl-related tariff is seen as low-hanging fruit.

Citi highlighted that these reductions surpassed market expectations, injecting new optimism into the Chinese equity markets.

Effects on Economic Support

While this tariff relief significantly aids trade, it lessens the pressure for extensive fiscal stimulus in China. Citi indicated that the potential for an extra 1.5 trillion yen ($210 billion) in stimulus is now drastically decreased, which could lead policymakers to adopt a cautious approach.

Positive Outlook for Equities

With easing trade concerns and appealing local valuations, Citi reaffirmed its bullish stance on HK and PRC equities. Investors interested in assessing immediate market responses can track today’s leading stocks through the Market Biggest Gainers API at entreprenerdly.com, showcasing top performers across major Asian markets.

Do you want to know which sectors in China will benefit most, or require updates on stimulus developments?