Shipping chain repair and structural opportunities after the reduction of tariffs between China and the US

The Zhitong Finance App learned that on May 12, China and the US announced drastic tariff cuts. The average US tariff on China was reduced from 145% to 30%, and China simultaneously abolished countervailing tariffs in the same proportion. This policy adjustment, which exceeded expectations, not only injected stabilizer into Sino-US economic and trade relations, but also caused waves in the capital market. Combining UBS's latest research and market trends, this article focuses on China's stock market strategy after tariff cuts, and focuses on analyzing the repair logic and investment opportunities of the Sino-US shipping chain.

I. The “triple dividend” of tariff cuts and market reaction

1. Emotional healing and return of funds

The reduction in tariffs far exceeded market expectations (previously generally expected to drop to 50-60%), directly boosting global risk appetite. Hong Kong stocks were the first to respond. The Hang Seng Index rose 3% on the same day, the biggest one-day increase since the beginning of March. Export chain leaders Sunyu Optical Technology (02382) and Chuangke Industrial (00669) soared 14.8% and 6.7% respectively. A-shares also showed positive signs. The volume of tariff-sensitive sectors such as consumer electronics and semiconductors rose, and the net inflow of capital to the north exceeded 10 billion dollars in a single day.

2. Export chain cost restructuring

For every 1 percentage point reduction in tariffs, the export costs of enterprises are reduced by an average of 0.5%-0.8%. Take the US market as an example. The tax rate was reduced from 145% to 30%, which is equivalent to removing the “price shackles” for Chinese exports, and profit margins in some industries are expected to increase by 5%-8%. Let's take a closer look:

Technology and high-end manufacturing: optical modules, semiconductor devices, consumer electronics, etc. directly benefit. Companies such as Zhongji Xuchuang and Xinyisheng saw short-term stock price increases of more than 10% due to North American order volume expectations.

New energy vehicles and energy storage: If the US abolishes the 127.5% tariff on China's new energy vehicles, the export competitiveness of the Ningde Era (03750) and BYD (01211) will increase significantly. Combined energy storage and photovoltaic industry chain costs will drop, and there is clear room for valuation repair of related targets.

Cross-border e-commerce and logistics: Companies such as Huamao Logistics raised their profit expectations due to improved customs clearance efficiency and a recovery in trade volume.

3. Supply chain and valuation repair

Tariff cuts ease the pressure on manufacturing costs and push enterprises to optimize their supply chain layout. The Hong Kong stock Hang Seng Technology ETF has accumulated a 15% increase over the past 21 trading days, reflecting the market's acceptance of the supply chain repair logic. At the same time, the attractiveness of Hong Kong stock valuations has increased. Combined with expectations of a return in foreign capital, the net purchase of Hong Kong technology stocks reached HK$20 billion in a single day.

II. The China-US Shipping Chain: An Underestimated Repair Opportunity

1. The State of Shipping: The Truth Amidst Poor Expectations

The market previously feared a cliff-style drop in shipping volume between China and the US due to tariff escalation, but UBS ship tracking data showed that about 6-8 ships sail from China to the US every day, which is in line with historical levels. Despite a slight slowdown in mid-April due to post-Spring Festival adjustments, capacity bottomed out and rebounded in the second week of May. The capacity of the China-US route rebounded from 310,000 TEU to 390,000 TEU, an increase of 25.8%. The Port of Los Angeles predicts that the number of ships arriving in port will increase in the next few weeks, further verifying the stability of shipping activities.

2. The logic of the game between freight rate and capacity

In the short term, tariff cuts have triggered rush demand. Combined with the peak season approaching, spot freight rates on the western US line have risen from $2550/FEU at the end of April to more than $3,500/FEU. Shipping companies adjusted capacity simultaneously. The number of flights on the Western American Line in May increased 68% year over year, and capacity decreased by 9.8% to cope with possible supply and demand imbalances. In the medium to long term, if tariff negotiations continue to advance, the shipping market is expected to shift from “negative feedback” to “positive feedback,” that is, a virtuous cycle of rising demand and capacity optimization.

3. Investment targets and risk tips

Beneficial sectors: port shipping (Ningbo Shipping, COSCO Maritime Control), logistics (Huamao Logistics), container manufacturing (CIMC Group).

Risk factors: Tariffs may be repeated after the 90-day exemption period. Be wary of the risk of a pullback caused by actual trade data for July-August falling short of expectations.

III. Structural Opportunities and Defense Strategies

1. Technological breakthroughs and export chain resonance

Tariff cuts reinforce the logic of the main line of science and technology. Apple, Nvidia, and Tesla supply chain companies (such as Lixun Precision) are more flexible in the short term due to improved profit expectations. At the same time, domestic substitution is still a long-term theme, and fields such as semiconductor equipment (North China Chuang) and industrial motherboards need to be focused on.

2. Consumer repair and defense configuration

Tariff cuts lower the prices of imported goods, benefiting high-end consumption (luxury goods, cosmetics) and auto parts sectors. Domestic leaders such as liquor and home appliances may benefit from a recovery in consumption. Furthermore, high-dividend assets (Changjiang Electric Power, China Shenhua) can hedge against market fluctuations and provide a margin of safety in a deflationary environment.

3. Federal Reserve Policy and Global Capital Flows

Expectations of the Federal Reserve's interest rate cut are heating up, which may ease the pressure on the RMB exchange rate and attract foreign investment back into A-shares. Historical data shows that in the early days of interest rate cuts, liquidity-sensitive sectors such as non-ferrous metals and brokerage firms performed well. However, it is important to note that if the July tariff negotiations are blocked, the market may react early to policy uncertainty, and the position structure will need to be adjusted dynamically.

IV. Risks and long-term challenges

Policy uncertainty: After the 90-day exemption period, the 24% tariff suspension may resume, and fentanyl-related tariffs remain variable.

Global supply chain restructuring: The trend of “decoupling” the industrial chain between China and the US has existed for a long time, core issues such as technology blockades have not been fundamentally resolved, and autonomous and controllable technology is still a must.

Domestic economic pressure: China's deflation continues. In April, CPI fell 0.1% year on year, and PPI fell 2.7% year on year. We need to pay attention to the impact of weak consumption on corporate profits.

The reduction in tariffs between China and the US has opened the two main lines of “export restoration+technological breakthroughs” for the Chinese stock market. In the short term, we focus on directly benefiting sectors such as shipping chains, consumer electronics, and new energy sources. In the medium to long term, we need to grasp the trend of technological autonomy and control and global capital rebalancing. Investors should closely follow the progress of July tariff negotiations, Federal Reserve policy trends, and domestic economic data to hedge risks while seizing opportunities. As the “blood line” connecting the economy and trade between China and the US, the resilience and sustainability of the shipping chain will be a key variable in verifying market expectations, and it is worth focusing on.