China stocks face near-term weakness as Trump tariffs loom- Morgan Stanley

Investing.com– Chinese stocks are likely to face profit-taking and increased risk aversion going into the New Year holiday, Morgan Stanley (NYSE:MS) analysts said in a note, especially in the face of U.S. trade tariffs under President Donald Trump.

Trump did not impose any trade tariffs on day one of his presidency. But the 47th U.S. President did threaten to impose 10% tariffs on all Chinese imports, by as soon as February 1. 

Trump also called for an investigation into trade deficits and tariffs, to be completed by April 1. 

While the 10% duty is far smaller than the 60% tariffs threatened earlier by Trump, it still represents headwinds for Chinese exports. MS analysts said they expected a potential slowdown in Chinese exports this year, amid heightened tariff uncertainty. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes clocked some losses this week after Trump’s comments, although they were still trading flat so far in 2025. 

“We expect to see an exacerbated tendency from investors to take profits and reduce risk exposure ahead of the holiday season,” MS analysts wrote in a note.

MS also flagged potential near-term risks from a downward revision in earnings for 2024, as a slew of major Chinese companies prepare to report annual earnings in the coming weeks.