Insights 
VT 
China has revised its export control lists, enabling companies to request permission for trade with restricted entities. This includes lifting export controls on 12 US-based entities and offering licenses to compliant exporters.
These changes imply a more selective approach, allowing exemptions on a case-by-case basis instead of imposing broad prohibitions. The adjustments could be intended to lower tensions in certain areas while preserving the capacity to enforce restrictions where strategic or security issues are perceived.
Impact on Market Volatility
Given China’s more flexible approach to its export controls, we should anticipate a reduction in overall market volatility. Geopolitical tension with the US has been a key factor keeping implied volatility elevated, with the VIX hovering around 18 for much of this summer. This move could see the VIX fall towards the 14-15 range in the coming weeks.
This easing directly benefits the semiconductor and technology sectors, which have been at the center of trade restrictions. The PHLX Semiconductor Index (SOX) has already seen a 5% lift in August 2025, and this news could fuel further gains. We should consider buying call options or selling puts on major tech ETFs and the 12 specific US companies now removed from the list.
The news may also trigger a rally in Chinese equities, particularly within the Hang Seng Tech Index, which has underperformed its global peers by over 10% so far in 2025. A shift in policy could reverse some of the recent capital outflows that have suppressed these stocks. We could look at long futures contracts on the Hang Seng or A50 indices to capture a potential rebound.
Conditional Nature of the Policy
However, we must remember that this is a conditional policy, not a complete removal of trade barriers. Looking back at the market reactions during the 2018-2019 trade disputes, sentiment could reverse very quickly. Therefore, using defined-risk strategies like bull call spreads may be wiser than taking on the unlimited risk of naked short puts or futures.
