The emergence of DeepSeek was the latest catalyst for investors who are increasingly viewing Hong Kong and China’s beaten-down markets as a potential source of opportunity amid Trump’s erratic tariff policies.
“The US has historically been very reliable on making good on its commitments and obviously in the new world it is becoming more challenging,” says Brice.
“We don’t know where we will end up, but I think that some assumptions … are now so obviously in doubt. People are going to have to think about how they set domestic policy to be more resilient to changes in US policymaking.”
Trump has wasted no time in imposing additional 20 per cent tariffs on Chinese goods, but has also irked allies with his 25 per cent levies on steel and aluminium imports and threats of reciprocal tariffs from April 2.
“All of the talk about tariffs is just leading to greater uncertainty,” says Robert Secker, a portfolio specialist covering Asian and Chinese stock markets at T. Rowe Price.
“China is benefiting to a degree from simply a spike in uncertainty causing investors to look outside the US market for the first time in a long time. It is the same case as in Europe.”
Chinese President Xi Jinping has raced to grasp the opportunity offered by the increased uncertainty.
China’s benchmark sharemarket has surged this year.Credit: Bloomberg
Last month Alibaba founder Jack Ma, one of China’s most famous and wealthy entrepreneurs, appeared at a meeting alongside Xi, nearly five years after his criticisms of Beijing’s financial sector saw him abruptly vanish from public life.
Ma, who has a fortune worth nearly $US40 billion according to Bloomberg, shook hands with Xi during the meeting with business leaders, where he was seated in the front row.
“You could see they’re sending soft signals,” says Brice. “Jack Ma being on the front row, those sorts of things are important signals to them saying ‘we support this development’.
“From a sentiment perspective, I think that was a very strong signal.”
China’s leadership began making those signals as far back as September last year, when its mainland stock market and Hong Kong were the “most loathed” equity indexes in the world.
Beijing announced a massive stimulus package while Xi called for the introduction of “forceful” interest-rate cuts, as China’s 24-man politburo – the highest political body of the Chinese Communist Party – made a rare admission that its economy was facing fresh turmoil.
“The government came out with some clear statements that they were going to be supportive of the economy, supportive of private businesses, supportive of the property sector and just trying to kickstart the consumption story,” says T. Rowe’s Secker.
“If you like, there was a policy put in place whereby future bad economic news would be met by positive reaction by the Chinese authorities, so that kind of took away the ‘China is uninvestable’ threat that had overhung the market … really from 2021 onwards.”
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What has followed is a flood of investment in China’s stock markets which has, at least initially, greatly benefited the country’s tech industry.
The wider Hang Seng Tech Index has climbed more than 25 per cent in 2025, boosted by companies like internet and gaming giant Tencent, which said on Wednesday that profits in the fourth quarter of 2024 surged 90 per cent as it accelerated a push into artificial intelligence.
Ma’s fortune is estimated to have grown by more than $US5.5 billion so far this year as Alibaba, his e-commerce giant, has surged by more than 50 per cent.
“Alibaba has done phenomenally well this year,” says Secker.
“They are in a front-and-centre position to benefit from AI. The stock was incredibly cheap, very underowned, so we had a situation where we’ve seen fast money move back into China.
“This is really a reflection that the market was ignored by international investors over the past couple of years, so they’re beginning to get a little bit more skin in the game.”
The surge in China’s markets has piqued interest from the West, which is being courted by China as US tariff policies upend the global world order on trade.
Dozens of foreign chief executives were due in Beijing on Sunday and Monday for a flagship development conference where some were expected to meet Xi.
Ola Kallenius, chairman of Mercedes, and Laurent Freixe, chief executive of Nestlé, confirmed their attendance to the London Telegraph. They were expected to join bosses from FedEx, Siemens, BMW, chip designer Qualcomm, Saudi Aramco, Citadel, Rio Tinto, Estée Lauder, Standard Chartered and KPMG, according to Reuters.
Also among the confirmed attendees was AstraZeneca chief executive Pascal Soriot, who on Friday announced plans for the pharmaceuticals giant to invest $US2.5 billion into a new research and development facility in the Chinese capital.
Yet the move, which Soriot said “reflects our belief in the world-class life sciences ecosystem in Beijing”, came as five of the drugmaker’s current and former staff remain detained by China police over allegations of data privacy breaches.
Jack Ma has been welcomed in from the cold by Beijing, and his fortune is soaring. Credit: AP
Indeed, most Western investors are still offering “a bit of a raised eyebrow” at the performance of Hong Kong, according to Brice, who retains “some fundamental concerns about how sustainable the broad market rally is”.
China’s economy could still be hit by deflation, he says, with state figures showing this month that inflation fell by more than expected and below zero in February, which was the first time that had happened in 13 months.
“All of the talk about tariffs is just leading to greater uncertainty.”
Robert Secker, a portfolio specialist covering Asian and Chinese stock markets at T Rowe Price.
The world’s second-largest economy continues to battle with the aftermath of the property crisis that led to the collapse of development giant Evergrande. Meanwhile, markets are yet to see if Trump will follow through on his pre-election threat to put 60 per cent tariffs on China.
Last week, US Treasury Secretary Scott Bessent warned he could block outbound investment from the United States.
“At the moment if you want to invest in Chinese stocks, you can. If you’re a US investor, will that change at some point?” said Brice.
“I think there is a non-zero probability there. I think that is suppressing some of the demand that would have been there otherwise.”
Many investors remain committed to China, despite the solid gains which prompted a bit of profit-taking from Hong Kong stock market investors towards the end of last week.
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Fidelity China Special Situations, a London-listed investment trust focused on Asia, has surged more than 25 per cent so far this year.
“Major uncertainties had been weighing on sentiment, including weak consumer confidence, a struggling property market, and concerns over potential US tariff increases under the new administration,” says the fund’s portfolio manager Dale Nicholls.
“Despite these challenges, I have continued to meet companies in China that are innovating, investing in R&D, expanding their market share at home and abroad, and ultimately growing their profits.
“Now some of the economic headwinds are easing and global investors are starting to recognise the opportunities more clearly.”
Telegraph, London
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