Chinese stocks were set to continue their four-day rise due to expectations of increased stimulus measures and the possibility of a trade agreement with the US, even amid concerns over Donald Trump's proposed 145% tariffs. Hong Kong-listed Chinese stocks showed a strong performance, increasing by up to 2.7%, while the onshore CSI 300 Index rebounded to add 0.4%. This performance surpassed the broader Asian market index.

Investors are optimistic about Beijing's commitment to implementing new growth support policies as they await the results of a meeting among China's top leaders to discuss additional stimulus measures. Furthermore, there is hope for a breakthrough in the trade negotiations between the US and China, as Trump signaled a willingness to be flexible regarding exemptions from the tariff regime.

Although earlier reports indicated a significant escalation in US-China trade tensions with the imposition of 145% tariffs, the market sentiment turned positive following Trump's statements about potential exemptions for products and progress towards a trade deal. Analysts like Steven Leung from UOB Kay Hian Hong Kong highlighted the potential positive impact on stocks, with investors expecting supportive measures from Chinese authorities.

Trump expressed optimism about nearing the first trade agreements and believed that China would eventually engage in negotiations. China recently announced an 84% levy on all US imports, retaliating against the US's tariff increase to 104%. Despite the escalating tensions, Chinese officials have signaled a willingness to engage in dialogue while also supporting the stock market through state-backed funds.

Despite the ongoing resilience of Chinese stocks, some global investors have started reducing their exposure due to the deteriorating US-China relations. Several large US-listed exchange-traded funds tracking Chinese stocks witnessed significant sell-offs, with traders disposing of nearly $1 billion worth of shares in one day.