Market Views: These stocks could benefit from the Trump-Xi meeting with US-China trade relations in focus

Hopes are running high as this week’s meeting between US President Donald Trump and Chinese President Xi Jinping gets underway, with investors believing the summit may ease trade tensions and revive momentum  in a number of sectors.

Talks are expected to focus on trade and export controls, including tariffs, semiconductor restrictions and rare earth exports.

Traders expect Trump to announce an extension to October’s tariff truce, when China agreed to halt export controls on rare earths while the US cut the fentanyl-related tariffs on the country to 10% from 20%. 

On the table for discussion is the prospect of China buying more agriculture products, energy and aircraft to avoid tariff escalation. This could deliver a broad-based boost to Chinese equities thanks to a lower geopolitical risk premium, stronger yuan, improved capital flows and better confidence in Chinese tech and exports.

Any thawing in tensions on trade could be particularly important for Chinese tech firms in the AI space as they remain hampered by US chip export restrictions. Nvidia CEO Jensen Huang’s present on the US delegation is seen as particularly important and suggests progress is likely. Reuters reported that shortly after Trump met Xi the UScleared sales of Nvidia’s H200 AI chips to a number of major Chinese technology firms, including Alibaba, Tencent, JD.com, Lenovo and Foxconn.

A thawing would be good for Chinese tech stocks, and may be most clearly expressed via China-exposed funds like the Invesco MSCI China Tech All Shares Stock Conn ETF. However, it’s worth noting that while there could be a boost from the summit in the event of some concessions, earnings growth in the China tech space remains lacklustre. The meeting could also cast more light on the divergence between mainland and Hong Kong stocks - mainland A shares are exposed more directly to the hardware part of the AI trade that is doing very well, while Hong Kong-listed tech shares are made up of internet and ecommerce stocks that are not riding the AI picks-and-shovels trade in the same way.

On the US side, Boeing stands to gain from any commitment from China to purchase more aircraft, with traders talking about the biggest-ever order. CEO Kelly Ortberg is part of the US delegation. 

Another US CEO on the trip is Apple’s Tim Cook. There could be upside for the company should trade tensions and restrictions ease. China remains critical for assembly, it’s a huge end market, and tariffs and restrictions hit margins and demand simultaneously.

Micron’s CEO and Meta’s president are also along for the trip – they are facing thorny issues that could be up for discussion - eg China’s ban on Micron’s products in key information infrastructure, and restrictions against Facebook.

And if tensions cool, investors may rotate back into Chinese consumption plays such as the European luxury sector, which includes the likes of LVMH, Kering, Richemont, Burberry and Estée Lauder.