By Lale Akoner
Recent rally in FTSE 100 stocks with Chinese exposure, reflects growing investor optimism as US-China trade tensions, at least in rhetoric, may ease. HSBC and Standard Chartered, for instance, gained over 4% after President Trump and Treasury Secretary Bessent signalled a de-escalation in tariffs, lifting sentiment across Asian markets where these lenders generate the bulk of their revenues.
HSBC and Standard Chartered are structurally tied to Asia, with over two-thirds of income linked to the region. That makes them sensitive to trade volatility but it also gives them access to these dynamic growth markets. Crucially, both banks have strong capital positions, rising fee income, and they continue to benefit from higher rates in core markets. Even if rhetoric turns negative again, their diversified footprint and robust balance sheets leave them well placed to absorb trade-war related sentiment shocks.
Broader UK banks have also shown impressive resilience so far in 2025. While UK’s growth is expected to be stagnant this year, we think that lenders are entering this phase with high capital buffers, improved cost control, and conservative lending books. Mortgage stress appears contained, and retail deposit bases remain stable. Domestic-focused banks may see pressure on loan demand, but overall credit quality remains solid.
For retail investors, today’s rally signals more than a temporary relief bounce. It reflects how both globally exposed and domestically focused UK banks are better prepared than in past downturns. With valuations still undemanding and dividend yields attractive, the sector remains worth watching for those seeking long-term income and value as macro risks gradually ease.
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