Key News

Mainland China and Hong Kong markets were closed overnight to celebrate the Ching Ming Festival ("Tomb Sweeping Day"). This is the day when Chinese families visit the tombs of their ancestors to clean the gravesites and make offerings. It is important to note that with China's markets closed overnight, the natural buyers were absent from the markets, which is leading to a steep selloff in US-listed shares. US-listed stocks and ETFs are being priced lower due to the market closure in Hong Kong. Typically, we don't publish our daily notes when China's markets are closed, but given today's volatility, we have a special edition.

Despite the holiday, things were not quiet this morning as China announced a 34% retaliatory tariff to match new tariffs from the US announced yesterday. The retaliatory tariffs are due to begin on April 10th. The back-and-forth is causing volatility today during US trading.

Since the market opened, Vietnam has said that negotiations have begun with the US. We believe other countries, including China, could follow suit.

Crucially, exports to the United States now represent only 14% of China’s total exports, down from 21% in 2006. The potential impact on China's economy overall is much less today than it would have been in the past.

Moreover, China's internet sector has very little revenue exposure to the US and should not, as a whole, be too adversely affected by tariffs from a fundamental perspective. The constituents of the CSI Overseas China Internet Index had less than 2% revenue exposure to the US as of the latest earnings reports from Q4 of 2024.

Stay tuned as we monitor the situation and please reach out to us with questions at [email protected].