Asian stocks gain on AI investment hopes, but China faces tariff concerns

Asian stocks saw modest gains, driven by optimism surrounding increased artificial intelligence (AI) investments under Donald Trump’s administration, despite concerns over the impact of tariffs on China.

Shares in Japan, South Korea and Taiwan jumped in the wake of Trump’s plan for an investment push in the AI sector, which lifted technology stocks across the region, News.Az reports, citing foreign media.

However, Chinese shares bucked the trend after the US president said he was still considering a 10% tariff on all goods from the country. That fueled a decline of as much as 1.3% in China’s benchmark CSI 300 Index.

The divergent fortunes of Asian stock markets underscore the difficult questions investors will be forced to weigh up over the coming months, when the Trump administration is expected to make a series of sweeping policy changes. The broad MSCI Asia Pacific Index was up around 0.1%.

“China will still need to brace for potential tariffs and that’s going to slow down exports this year,” Frederic Neumann, chief Asia economist at HSBC in Hong Kong, said on Bloomberg TV. It comes at a difficult time for the economy and “there’s not much really that China can do apart from trying to negotiate,” he added.

US 10-year Treasury yields advanced one basis point after falling five basis points in the previous session. The dollar strengthened against every Group-of-10 peer, while the onshore and offshore versions of the Chinese yuan were among the worst performers in Asia’s currency market.

The decline in Chinese shares surprised some market participants. The country was spared the brunt of Trump’s early policy flurry, with his first big tariff comments instead targeting Canada and Mexico.

“We are seeing quite a broad-based pull back today which is a surprise to me,” said Nigel Peh, a portfolio manager at Timefolio Asset Management Co. “I feel the 10% tariffs against China — a more gradual approach — are actually better than feared. There’s a chance that people are just using any excuse to take profit.”

Chinese Vice Premier Ding Xuexiang told the annual World Economic Forum in Davos, Switzerland, that his nation will expand its imports “to promote balanced trade.”

Elsewhere in Asia, the Bank of Japan is moving toward deciding to raise interest rates at its policy meeting this week, Kyodo News reported. That supports recent speculation that the bank will hike by 25 basis points. The yen was down against the greenback.

SoftBank Group’s shares rose more than 11% after Trump named the company as a participant in the ‘Stargate’ AI joint venture. The move pushed the Japanese company’s shares to their highest level since July, and helped boost sentiment for other tech stocks.

But China and Hong Kong tech stocks were largely left out of the rally. The Hang Seng Tech index, which includes some of China’s biggest tech firms, fell as much as 2.8%.

In commodities, oil held losses. Gold held near the highest since early November, with traders monitoring the outlook for the global economy.

News.Az