China unveiled several stimulus measures on May 7 and it was confirmed that the U.S. and China would hold official tariff negotiations this week.
In this PERSPECTIVES Special, we look at the impact of these events on Chinese equities.
Key takeaways:
- Monetary and regulatory stimulus: The PBoC announced its first RRR cut of 2025 and a policy rate reduction. Targeted liquidity support and new lending facilities were introduced to boost consumption and technology investment, alongside stock market measures from the China Securities Regulatory Commission (CSRC).
- Resilient domestic demand: Despite trade tensions, domestic consumption remains strong, with Labour Day tourism and spending data showing solid year-over-year (YoY) growth and a surge in foreign visitor activity.
- Progress toward U.S.-China trade talks: Trade negotiations are confirmed for May 9-12, with signs of de-escalation emerging. Potential tariff reductions and mutual concessions could ease trade friction and support a more favourable outlook for Chinese equities – particularly in the tech sector.
