Chinese machinery, textile and electronic stocks with US trade exposure seen gaining after Xi-Biden meeting

As US-China relations improve, speculation has arisen the meeting may pave the way for reduced tariffs and an end to the technology curbs

Top picks include Zhejiang Cayi Vacuum Container, Amlogic, chip maker for set-top boxes and smart televisions, and lighting component maker Guangzhou Haoyang

3-MIN READ3-MIN

US President Joe Biden, right, and Chinese President Xi Jinping shake hands before a meeting on the sidelines of the G20 summit meeting, on Nov. 14, 2022, in Bali, Indonesia. Photo: AP

Published: 8:00am, 15 Nov 2023

Chinese manufacturers of machinery, textiles and electronics with significant exposure to the US market could benefit in the wake of the meeting between President Xi Jinping and his US counterpart Joe Biden, analysts said as the heads of the world’s two biggest economies are set to meet for the first time in a year.

The two leaders are scheduled to talk on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco on Wednesday and traders said this is one of the most significant political events globally this year. The thawing of relations between Beijing and Washington has fanned speculation that the Biden administration may review the hefty tariffs imposed on Chinese imports since the trade war began in 2018.

“Given the acceleration of the mending of the China-US relations, there’s a large chance that an optimistic-case scenario for the relationship will occur after the meeting between the two leaders,” said Yang Zhengwang, an analyst at Northeast Securities. “The China-US relations will usher in a window for an easing period and we may see a narrow-down of the tariff list.”

US tariffs on imported Chinese goods average 19.3 per cent, with the punitive ones as high as 66.4 per cent, compared with the average of 3 per cent on other nations, according to Guotai Junan Securities.

Workers wearing face masks assemble electronic parts at a factory in Huaibei in central China’s Anhui Province. Photo: AP

Domestic appliance maker Zhejiang Cayi Vacuum Container, Amlogic, which makes chips for set-top boxes and smart televisions, and lighting fixture manufacturer Guangzhou Haoyang Electronic are among the top picks recommended by Northeast Securities ahead of the Xi-Biden meeting. The three companies rely on the US for at least 90 per cent of their sales, the brokerage said.

Shares of Zhejiang Cayi have advanced 51 per cent this year in Shenzhen and those of Guangzhou Haoyang have risen almost 3 per cent, while Amlogic has eased 4.7 per cent in Shanghai. All have outpaced the 7.5 per cent decline in the CSI 300 Index.