Mei Ri Jing Ji Xin Wen·2025-05-13 07:42Core Viewpoint - The recent US-China Geneva trade talks have led to significant progress, with both sides agreeing to substantially reduce bilateral tariffs, positively impacting market sentiment and Chinese stocks [1][4][5]. Group 1: Market Reactions - The Hang Seng Index surged on May 12, with technology and consumer stocks leading the gains, reflecting a rapid increase in market sentiment following the trade talks [1]. - Nomura became the first major Wall Street firm to upgrade its rating on Chinese stocks to "tactical overweight" after the trade talks, indicating a major positive for the Chinese stock market [4][5]. - Analysts are increasingly optimistic that the trade talks will facilitate more capital inflow into the Chinese stock market, with Citigroup's Pierre Lau projecting the Hang Seng Index to reach 25,000 points by year-end and 26,000 points in the first half of 2026 [1][4]. Group 2: Tariff Reductions - The joint statement from the US and China indicated that the US would cancel 91% of tariffs on Chinese goods and modify 34% of reciprocal tariffs, while China would suspend or cancel corresponding tariffs on US goods [4][5]. - The temporary reduction in tariffs is expected to provide short-term support to market sentiment, with analysts noting that the agreement exceeded market expectations [5]. Group 3: Investment Trends - There has been a notable increase in bullish bets on Chinese stocks by hedge funds, particularly US-based funds, in anticipation of positive outcomes from the trade negotiations [7]. - The MSCI China Index and CSI 300 Index saw increases of 2.4% and 1.9%, respectively, in the week leading up to the trade talks, indicating a positive market response [7]. - Goldman Sachs maintained an "overweight" rating on Chinese stocks, raising its earnings forecasts and target levels for major indices, reflecting confidence in the resilience of the Chinese market [10].