© Bloomberg. A woman stands at a trading terminal of a securities brokerage in Beijing, China, on Monday, March 7, 2016. Photographer: Qilai Shen/Bloomberg

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After vastly underperforming their American counterparts during the trade-war battles last year, China’s domestic shares are bearing up with a lot less relative damage this time around.

Since a near-6% mauling on May 6, a day after President Donald Trump’s tweeted pledge to step up tariffs on Chinese imports, the has even outperformed the . For the month of May, the two are roughly equal, with China’s onshore gauge slightly worse in dollar terms.

That’s a big change from last summer, when Trump tweeted that “our markets are surging, theirs are collapsing.”

Different This Time

“There seems to be this zone of relative stability in Chinese shares for a number of reasons, including inviting valuations,” said Daniel Xu, a managing partner at Beijing Eastern Smart Rock Asset Management Co. in Beijing. “There could be — more importantly — non-market forces at play,” he said, with Chinese officials eager for stability in equities in the run-up to the launch of a Nasdaq-style technology-sector board.

Chinese stocks got walloped in mid-June 2018, when Trump put China on notice he was proceeding with tariffs on $50 billion of imports and would keep going from there if needed. The Shanghai Composite entered a bear market later that month, vastly underperforming the U.S., and it lost ground most months for the rest of the year.

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Read a QuickTake about China’s plunge-protection team.

Boosted by the tax-cut fed growth spurt, the S&P 500 Index by contrast hit a new high in September. Wall Street then got hammered in October and December by fears about Fed tightening and the threat of a U.S. recession on the horizon.

Both markets put in a stellar first quarter of 2019, with China outstripping the U.S. as Chinese policy makers shifted to stimulus mode and confidence strengthened that a trade deal was coming. That was all upended in early May, and now the two markets may be on more equal footing, market players say. Both are off to a losing start in June.

“The U.S. had a higher position to fall from than China,” said Pan Yue, the investment director at Beijing JingHong Investment Co. in Beijing. And “the impact of the trade war on the U.S. is no less than that on China,” Pan said.

(Updates with June performance.)

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