China Stocks Slide on Trade Concerns, Hong Kong Rises on Nvidia Earnings

China stocks declined due to concerns over trade, while Hong Kong stocks rose on Nvidia's performance. The company is the world leader in programmable graphics processors and develops associated software. Net sales are primarily from computing and networking solutions (77.8%) and graphics processors (22.2%). The company offers laptops, desktops, gaming computers, computer peripherals, software, and platforms for automotive infotainment systems and cloud collaboration. Net sales are distributed geographically, with the United States accounting for 44.3%, Taiwan for 22%, China for 16.9%, and other countries for 16.8%.

Asian stocks experienced a range of reactions on Tuesday, July 2, 2025, amidst strong economic growth data from China and ongoing trade tensions. While most markets moved in a tight range, technology stocks, particularly in China, were buoyed by Nvidia Corporation's (NASDAQ:NVDA) announcement that Washington would allow it to resume sales of a popular artificial intelligence chip in China. This move was seen as a further de-escalation in the U.S.-China trade conflict.

Nvidia, the world leader in programmable graphics processors and associated software, has seen its stock price surge to all-time highs. The company's stock has gained 22% since the last analysis, reaching a price of 110.15 dollars [1]. Despite this significant increase, the author of the article remains bullish on the stock, having recently trimmed their position but still maintaining a positive outlook.

The company's performance is influenced by its leadership in the semiconductor industry, particularly in the development of AI and machine learning technologies. Nvidia's dominance in these areas is expected to continue, driving the company's growth and profitability. The forecast for the next months and years indicates a potential for continued growth, with predictions ranging from 110.15 dollars to 111.98 dollars for the beginning of April 2025, and a maximum price of 111.98 dollars [2].

However, the stock's valuation remains a concern for investors. The stock is considered expensive by many analysts, with strong quality and technical aspects but high valuations. This could lead to caution in terms of returns earned by investors. The author of the article acknowledges this but believes that the long-term prospects of Nvidia's growth and innovation justify the higher valuation.

In China, stocks declined due to concerns over trade and the announcement of tariffs by the U.S. President Donald Trump. The Shanghai Shenzhen CSI 300 rose 0.1%, while the Shanghai Composite fell 0.4% amid losses in state-backed property giant China Vanke Co Ltd (SZ:000002). The company forecast a $1.67 billion loss in the first six months of 2025, ramping up concerns over a prolonged decline in China's key property market [2].

However, the Chinese economy grew more than expected in the second quarter, with GDP growing 5.2% year-on-year, more than expectations of 5.1%. This growth was driven by improving trade relations between the U.S. and China, as well as consumer spending subsidies from Beijing. The muted market reaction to China's GDP figures was likely due to growth above 5% already being priced in [2].

In contrast, Hong Kong's Hang Seng index rose 0.8%, fueled chiefly by gains in local tech majors, including Alibaba (NYSE:BABA) Group (HK:9988), Tencent Holdings Ltd (HK:0700), and Baidu (NASDAQ:BIDU) Inc (HK:9888). Access to Nvidia's H20 chip, which is wildly popular in China, will allow Chinese tech majors to proceed with their artificial intelligence ambitions [2].

Overall, while Nvidia's announcement provided a boost to technology stocks in Asia, the broader market reactions were mixed. The company's strong performance and leadership in the semiconductor industry continue to drive its growth and profitability, but investors remain cautious due to the stock's high valuation.

References:
[1] https://trendlyne.com/us/equity/1554267/NVDA/nvidia-corp/
[2] https://www.investing.com/news/stock-market-news/asia-stocks-rangebound-amid-strong-china-gdp-tariff-concerns-nvidia-boosts-tech-4134599