Mainland Chinese stock markets struggled on Wednesday, reflecting lingering concerns over deteriorating US-China trade relations, even as a boost from Nvidia’s chip sales lifted sentiment in Hong Kong’s tech sector.
At midday, the Shanghai Composite Index slipped 0.13%, settling at 3,500.62 points, while the blue-chip CSI300 Index dropped 0.27%. The declines came as markets digested mixed signals from the United States, with President Donald Trump stating that the US would “fight China in a very friendly fashion.”
Tariff Fears Weigh on Sentiment
According to a note from Morgan Stanley, the outlook remains cautious.
“In our base case, we assume that the U.S. tariff rate on China would stay unchanged at 30%, but the recent escalation of tariffs on other economies is likely to further dampen global trade momentum.”
The note highlighted that the U.S. recently imposed a two-tiered tariff structure on imports from Vietnam, which may have implications for China due to transshipment concerns. If similar restrictions extend to more countries, China’s export performance could be further constrained.
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Nvidia’s Return Sparks Tech Rally in Hong Kong
In contrast, Hong Kong markets showed signs of strength, buoyed by Nvidia’s planned resumption of AI chip sales to China. The Hang Seng Index rose 0.28% to 24,658.55, marking its fifth consecutive session of gains, the longest winning streak in two months.
Tech giants traded in Hong Kong gained 0.61% overall at the midday break. Alibaba rose 1.67%, and Tencent added 0.29%.
Nvidia’s H20 AI chips, recently cleared for sales to China, have become part of broader US-China negotiations on rare earths, as confirmed by U.S. Commerce Secretary Howard Lutnick. The move comes after a meeting between Nvidia CEO Jensen Huang and President Trump.
At an exhibition in Beijing, Huang praised China’s AI capabilities, calling models from Deepseek, Alibaba, and Tencent “world class,” and emphasized that AI is “revolutionizing” global supply chains.
Meanwhile, rival chipmaker AMD stated the Department of Commerce would review its license applications to export MI308 AI chips to China.
Regional Snapshot
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MSCI Asia ex-Japan index: Down 0.09%
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Japan’s Nikkei 225 index: Up 0.27%
Despite mainland weakness, the regional tech rally, spurred by Nvidia’s announcement and optimism around AI, helped cushion broader market losses.