Do the APAC Markets Believe Trump?
We asked this question about Wall Street, and the answer was complicated. Now, let’s turn to APAC. If the U.S. markets have learned to tune out Trump’s more theatrical moves, how does the Asia-Pacific region respond? Particularly in China, where trade tensions, policy shifts, and economic recovery efforts create a unique backdrop, the stakes are high. Investors are watching, but are they convinced?
The playbook is familiar. Trump’s rhetoric on China has been a fixture of his political brand—hardline trade policies, tariffs, and national security framing of economic competition. The markets, however, have developed a muscle memory for these cycles. The question isn’t whether Trump’s policies will be aggressive but whether they will meaningfully shift economic outcomes.
The China trade and market response
One of the biggest signals in APAC markets is how Chinese equities and sectors with global trade exposure are reacting to Trump’s anticipated hard-line policies. Investor sentiment appears to be shifting, and we can look at specific indicators to understand the trend.
Solactive China Electric Vehicle Index: Up over 7% YTD, with most growth driven in February after a flat January. The index recovered from a 5% dip in early January, reflecting investor optimism despite geopolitical uncertainties.
MSCI China Tech Index: A barometer for how investors are positioning around trade tensions. The index surged nearly 40% from early September to early October before a correction, and the Deepseek developments in mid-January pushed the sector up 22% from its January lows.
Chinese semiconductor sector: Showing signs of recovery, though not yet at pre-COVID levels. The SIASCHIN Index (Semiconductor Industry Association China Sales Data) indicates improving sentiment, driven by domestic substitution and strategic government support.
Tariffs, trade, and the strength of the dollar
A recurring theme in APAC market discussions is tariff fatigue. The expectation of a more aggressive trade stance under Trump is no longer sending shockwaves through markets the way it did during his first term. Instead, APAC investors are adapting, seeking alternatives and positioning around policy shifts.
At the same time, a strong U.S. dollar has made U.S. equities increasingly expensive, prompting global investors to seek value elsewhere. China’s market, while still struggling through a prolonged negative cycle, is attracting interest. With the downturn extending beyond four years, expectations are rising that Beijing will introduce targeted stimulus measures to support key sectors.
The question remains: Will government intervention be sufficient to sustain positive momentum and shift the narrative?
China access and global investor behaviour
For foreign investors, accessing China remains a challenge. While participation in onshore markets via QFII has declined, offshore activity through U.S. and Hong Kong-listed Chinese ADRs provides insight into investor sentiment:
GS China ADR Basket: Up 11.95% YTD, reflecting growing investor appetite.
Hang Seng China Enterprises Index: Up 7.6% YTD, signalling cautious optimism despite policy uncertainty.
A market that has seen this before
So, back to the question—do APAC markets believe Trump? The short answer: they’ve seen this movie before.
The shock factor has worn off. Investors are positioning themselves for volatility, but they are not overreacting. The bigger question now is whether China itself will take bold enough steps to counteract market headwinds. Investors are waiting, watching, and, most importantly, hedging their bets.