AI and EV Stocks Thrive Amidst U.S. Tariff Tensions

Chinese stocks in Hong Kong saw a surge on Tuesday as investors flocked to AI and EV shares despite upcoming U.S. tariffs. The market remained optimistic for negotiations following President Trump's last-minute tariff suspension on Canada and Mexico. Key indices and stocks in AI and EV sectors witnessed significant gains.

On Tuesday, Chinese stocks listed in Hong Kong experienced a notable surge as investors eagerly invested in AI and EV shares, even as looming U.S. tariffs on China threatened the market. President Trump's impending 10% levy on Chinese goods, set to take effect at 1:01 pm in Beijing (0501 GMT), did little to deter the bullish sentiment.

Optimism grew among market players after President Trump delayed tariffs on Canada and Mexico, suggesting potential room for negotiation with China. Trump's press secretary stated that he plans to hold discussions with Chinese President Xi Jinping soon, reinforcing hopes for diplomatic solutions. Jason Chan, senior investment strategist at Bank of East Asia, noted the market's speculation on possible negotiations before any further escalation.

Leading the market's rally, the Hang Seng China Enterprises Index rose 2.6% during the midday break, reaching a three-month high. Meanwhile, the Hang Seng Tech Index surged by 3.9%, while AI-related stocks propelled the momentum further. SMIC, China's leading chipmaker, soared to a record high, and Hua Hong Semiconductor saw an 8.7% increase. The EV sector also gained momentum, with XPeng witnessing a 12.6% jump following its impressive growth report.