‘Buy the Dip’ Call Gets Louder as China Selloff Seen Limited

Market Resilience - Chinese markets showed unexpected resilience amid escalating trade tensions, indicating that investors are becoming accustomed to the ongoing conflict between Washington and Beijing [1] - The CSI 300 benchmark for onshore shares ended down only 0.5% despite President Trump's threat of an additional 100% tariff on China, with a notable afternoon rebound suggesting active dip-buying by investors [2][4] Investor Sentiment - US-listed Chinese stocks are recovering, with the KraneShares CSI China Internet ETF rising 3.8% in premarket trading after a 7.1% decline on Friday due to tariff threats [3] - Investors perceive renewed tensions as strategic posturing by both the US and China, aiming for leverage ahead of a potential deal, reflecting lessons learned from previous market turmoil [4][6] Sector Performance - The recent retreat in stock prices may attract investors who missed out on this year's rally, driven by enthusiasm over advancements in artificial intelligence and the strength of domestic chipmakers [5] - Shares of major tech companies like Alibaba and chipmakers such as Hua Hong Semiconductor have more than doubled this year, showcasing strong sector performance [5] Market Reaction - Following Trump's announcement of a potential 100% tariff and export controls, analysts anticipated a challenging day for Chinese assets, yet the market experienced a V-shaped rebound with the CSI 300 Index recovering most of its initial 2.7% drop [7][8] - The Hang Seng China Enterprises Index also showed resilience, bouncing back from intraday lows to a decline of only 1.5% [8]