After a week-long hiatus, Chinese equities have returned with renewed vigour, capturing investor attention amid evolving trade dynamics and robust internal consumption. The Shanghai Composite Index climbed 1% to 3,311.89, while the Hang Seng Index in Hong Kong rose 0.7% to 22,651.65, reflecting a market buoyed by both external negotiations and internal economic resilience.
This resurgence is underpinned by China’s openness to re-engage in trade discussions with the United States. The Chinese Commerce Ministry’s recent statement that “the door is open” for talks has injected a dose of optimism into global markets, even as high tariffs remain a contentious issue.
Domestically, the Golden Week holiday period showcased China’s economic vitality, with a significant uptick in tourism revenues indicating strong consumer spending. This internal demand provides a buffer against external uncertainties and underscores the country’s economic robustness.
However, challenges persist. A recent survey highlighted a decline in the services sector’s future activity, marking its lowest point outside the pandemic period. This dip in business optimism has led to job cuts, signalling areas that require policy attention.
On the global stage, investor sentiment remains cautious. U.S. President Donald Trump’s steadfast approach to tariffs continues to influence market dynamics, with recent comments suggesting no immediate plans to ease trade restrictions. This stance has implications for global supply chains and investor strategies.
Despite these headwinds, several Chinese companies are demonstrating resilience and growth. Electric vehicle leader BYD has seen its stock surge by 47.1% in 2025, driven by robust EV sales and international expansion. Similarly, Xiaomi’s foray into the EV market has been met with enthusiasm, with its stock up 56.8%.
Tech giants Alibaba and Tencent continue to be focal points for investors. Alibaba’s diversification into cloud computing and AI, alongside Tencent’s dominance in gaming and digital services, position them as key players in the evolving digital landscape.
While external trade tensions and internal sectoral challenges present hurdles, China’s stock market exhibits signs of resilience and adaptability. The combination of proactive trade engagement and strong domestic consumption offers a compelling narrative for investors seeking opportunities in the region.
Fidelity China Special Situations PLC (LON:FCSS), the UK’s largest China Investment Trust, capitalises on Fidelity’s extensive, locally-based analyst team to find attractive opportunities in a market too big to ignore.
