{Economic Intelligence Correspondent, 24th} Chinese President Xi Jinping has arrived in Washington for a three-day state visit, with the first outcome being a two-month extension of the trade truce, shorter than expected, causing export-related stocks to weaken. Mak Ka-ka, Head of Financial Products Trading and Head of Research at YungFeng Securities (Asia), said specific details are unlikely to be announced after the meeting, offering no support for upgrading earnings forecasts of export stocks. Even if subsequent positive news drives a rebound, it is more likely to be merely a trading bounce. She also pointed out that while there remains room for negotiation on rare earths, reaching consensus on high-end technologies such as AI and chips between China and the U.S. is extremely difficult, and investors should not have excessive expectations.
*Mak Ka-ka: Lack of Detail in Trade Arrangements Likely to Fail to Boost Stock Prices*
This marks the first visit by a head of state to the U.S. in three years, and the first state visit in 11 years, also representing mutual visits by the leaders of China and the U.S. within six months. With intensive consultations between trade teams and successive high-level dialogues, the market hopes both sides can achieve breakthroughs on substantive issues such as tariff reductions and extending the trade truce, and anticipates high-level interactions could ease technology export controls, thereby reducing geopolitical risks.
Currently, the first outcome of the Xi-Trump meeting has emerged: U.S. Treasury Secretary Bessent said China and the U.S. have agreed to extend the trade truce by two months until January 10 next year. However, this is shorter than the previously reported three to six months by U.S. Trade Representative Grillo, and export-related stocks weakened accordingly today. Mak Ka-ka said the market had already anticipated that China and the U.S. might not reach a comprehensive trade agreement, but still hoped for a longer, more stable framework, or even partial tariff removal. With only a two-month extension, the market tends to interpret this event as "preventing further deterioration" rather than a turning point for improved earnings in export stocks. Mak Ka-ka added that apart from the Xi-Trump meeting, recent high U.S. bond yields and oil prices are also pressuring market valuations.
Regarding whether the trade truce period might be extended again, Mak Ka-ka pointed out five indicators to watch: the duration of the trade truce; the extent and list of tariff reductions; the procurement scale of U.S. agricultural products, energy, and aircraft; the timeline for rare earth supply and export licenses; and the relaxation of controls on high-end technologies such as AI chips. However, she admitted that even if positive news emerges later, any rebound in export stock prices would likely be mostly transactional. For stocks to achieve a medium- to long-term upward trend, investors must focus on the earnings models of export stocks, which depend on the implementation of specific details regarding products, tax rates, and execution timelines. But Mak Ka-ka predicted no specific details would be announced after the meeting, thus offering no help for upgrading earnings of export stocks.
As one of the key arrangements in the overall trade framework, Bessent revealed that substantial progress has been made in specific discussions on mutually reducing $30 billion in tariffs. Reports indicate that the framework would involve each side selecting approximately $30 billion worth of "non-critical, non-sensitive" goods and reducing tariffs to Most Favored Nation (MFN) levels. The U.S. is expected to benefit in areas including agricultural products, energy, and medical equipment, while China would focus on low-end consumer goods and daily necessities. Mak Ka-ka stated bluntly that this news also lacks specific details, so its impact on stock prices is merely neutral. Regarding the timing of the list's release, Mak Ka-ka predicted it would not be announced during the Xi-Trump meeting but finalized months later after multiple rounds of economic and trade consultations.
*China and U.S. Unlikely to Reach Consensus on High-End Technology*
On high-end technologies such as chips and AI, China and the U.S. previously announced a dedicated meeting on AI safety in Shenzhen two months later, with plans to establish an "accident notification hotline." Mak Ka-ka said AI and chip fields involve core high-end technologies, making consensus extremely difficult to achieve. In comparison, there is even greater room for agreement on rare earths. Therefore, investors should not overly expect the Shenzhen meeting two months later to bring利好 to chip and large model-related stocks.
Mak Ka-ka emphasized that stock price movements in the chip and AI sectors are by no means solely determined by the outcome of a single meeting, and the market should not place excessively high expectations. She analyzed that, compared to diplomatic meetings, this sector is more deeply influenced by macroeconomic factors such as Federal Reserve interest rate hike expectations, U.S. bond yields, and oil prices, either boosting or pressuring prices. Meanwhile, industry capital expenditure levels, as well as key technological breakthroughs and capital spending trends of leading enterprises, have a far more direct impact on stock prices than political meetings. (nw)
*Mak Ka-ka: Lack of Detail in Trade Arrangements Likely to Fail to Boost Stock Prices*
This marks the first visit by a head of state to the U.S. in three years, and the first state visit in 11 years, also representing mutual visits by the leaders of China and the U.S. within six months. With intensive consultations between trade teams and successive high-level dialogues, the market hopes both sides can achieve breakthroughs on substantive issues such as tariff reductions and extending the trade truce, and anticipates high-level interactions could ease technology export controls, thereby reducing geopolitical risks.
Currently, the first outcome of the Xi-Trump meeting has emerged: U.S. Treasury Secretary Bessent said China and the U.S. have agreed to extend the trade truce by two months until January 10 next year. However, this is shorter than the previously reported three to six months by U.S. Trade Representative Grillo, and export-related stocks weakened accordingly today. Mak Ka-ka said the market had already anticipated that China and the U.S. might not reach a comprehensive trade agreement, but still hoped for a longer, more stable framework, or even partial tariff removal. With only a two-month extension, the market tends to interpret this event as "preventing further deterioration" rather than a turning point for improved earnings in export stocks. Mak Ka-ka added that apart from the Xi-Trump meeting, recent high U.S. bond yields and oil prices are also pressuring market valuations.
Regarding whether the trade truce period might be extended again, Mak Ka-ka pointed out five indicators to watch: the duration of the trade truce; the extent and list of tariff reductions; the procurement scale of U.S. agricultural products, energy, and aircraft; the timeline for rare earth supply and export licenses; and the relaxation of controls on high-end technologies such as AI chips. However, she admitted that even if positive news emerges later, any rebound in export stock prices would likely be mostly transactional. For stocks to achieve a medium- to long-term upward trend, investors must focus on the earnings models of export stocks, which depend on the implementation of specific details regarding products, tax rates, and execution timelines. But Mak Ka-ka predicted no specific details would be announced after the meeting, thus offering no help for upgrading earnings of export stocks.
As one of the key arrangements in the overall trade framework, Bessent revealed that substantial progress has been made in specific discussions on mutually reducing $30 billion in tariffs. Reports indicate that the framework would involve each side selecting approximately $30 billion worth of "non-critical, non-sensitive" goods and reducing tariffs to Most Favored Nation (MFN) levels. The U.S. is expected to benefit in areas including agricultural products, energy, and medical equipment, while China would focus on low-end consumer goods and daily necessities. Mak Ka-ka stated bluntly that this news also lacks specific details, so its impact on stock prices is merely neutral. Regarding the timing of the list's release, Mak Ka-ka predicted it would not be announced during the Xi-Trump meeting but finalized months later after multiple rounds of economic and trade consultations.
*China and U.S. Unlikely to Reach Consensus on High-End Technology*
On high-end technologies such as chips and AI, China and the U.S. previously announced a dedicated meeting on AI safety in Shenzhen two months later, with plans to establish an "accident notification hotline." Mak Ka-ka said AI and chip fields involve core high-end technologies, making consensus extremely difficult to achieve. In comparison, there is even greater room for agreement on rare earths. Therefore, investors should not overly expect the Shenzhen meeting two months later to bring利好 to chip and large model-related stocks.
Mak Ka-ka emphasized that stock price movements in the chip and AI sectors are by no means solely determined by the outcome of a single meeting, and the market should not place excessively high expectations. She analyzed that, compared to diplomatic meetings, this sector is more deeply influenced by macroeconomic factors such as Federal Reserve interest rate hike expectations, U.S. bond yields, and oil prices, either boosting or pressuring prices. Meanwhile, industry capital expenditure levels, as well as key technological breakthroughs and capital spending trends of leading enterprises, have a far more direct impact on stock prices than political meetings. (nw)
