HK-listed Chinese stocks hit 3-month high despite China, US tariffs

Updates closing prices, adds quotes

By Jiaxing Li

Hong Kong, Feb 4 (Reuters) - Chinese stocks listed in Hong Kong surged on Tuesday as investors loaded up on artificial intelligence and electric vehicle shares while shrugging off news of tit-for-tat Sino-U.S. tariffs on each other's goods.

China's finance ministry announced a package of tariffs on a range of U.S. products in an immediate response to President Donald Trump's 10% tariff on Chinese imports that went into effect at 0501 GMT.

Investors had been hoping Trump would retract the proposal to raise tariffs on China at the last minute, just as he did with Canada and Mexico on Monday.

However, as the deadline passed and U.S. tariffs came into force, Beijing announced its own levies of 15% for U.S. coal and LNG and 10% for crude oil, farm equipment and some autos. The new tariffs on U.S. exports will start on Feb. 10, China's finance ministry said.

"China is trying to get some bargaining power before getting close to the negotiating table. It doesn't mean that they will not go for negotiation talks," said Steven Leung, who handles institutional trading at stockbroker UOB-Kay Hian in Hong Kong.

Trump's press secretary said the president will speak with Chinese President Xi Jinping in the next couple of days

The Hang Seng China Enterprises Index .HSCE closed up 3.5% at a fresh three-month high. The Hang Seng Tech Index .HSTECH surged 5.1%, and Hong Kong's benchmark Hang Seng index .HSI added 2.8%.

The Hang Seng Index has advanced 3.6% so far this year, outperforming major global markets including Japan .N225 and the U.S. S&P 500 index .SPX. Wong Kok Hoong, head of equity sales trading at Maybank, said investors had so far viewed tariffs as a negotiation strategy between the two superpowers.

Trump's announcement of the 10% tariff had also come as a relief, for his threats soon after he won the election last year were to impose 60% tariffs on China.

"It's the glass-half-full way of looking at Hong Kong and China... perhaps only a 10% tariff and not the dreaded 60% from the get-go," he said. "In a way markets may be slowly interpreting tariffs as a negotiation tactic, and one can strike a deal with this POTUS."

Beijing's initial proposal to Trump's tariffs will centre on restoring the "Phase 1" trade deal signed in 2020 during his first term, the Wall Street Journal reported on Monday, citing sources.

Leading gains on Tuesday, AI-related stocks rallied as investors continued to pile up wagers on home-grown firms after startup DeepSeek released a large language model at a lower cost.

China's top chipmaker SMIC 0981.HK surged 8.5% to a record high, and peer Hua Hong Semiconductor 1347.HK advanced 12.7%.

The EV sector also lifted the market, with carmaker XPeng 9868.HK jumping 11.8% after the company said it delivered a nearly three-fold increase in smart EVs in January year-on-year.

Financial markets in mainland China will reopen on Wednesday after the long Lunar New Year holiday. China's benchmark blue-chip index .CSI300 fell 3% in January before the holiday, surrendering nearly half of September's 40% rally.

The markets may look through the political noise to focus on China's responses to U.S. tariffs and the upcoming National People's Congress (NPC) meeting in the next few weeks, analysts at Citi said in a note.