SHANGHAI: China’s blue-chip index dropped to a five-week low while Hong Kong shares sank to their lowest in two months on Monday, as fresh US crackdown, a looming trade war and elevated geopolitical tensions sapped already fading risk appetite.
China stocks post worst day in 6 weeks, Trump fears weigh
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The blue-chip CSI300 Index fell 0.5% to its lowest closing level since Oct. 17. The Shanghai Composite Index slipped 0.1% and touched a three-week low.
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In Hong Kong, the benchmark Hang Seng Index lost 0.4%, shedding almost all gains posted since late September when China’s policy stimulus triggered a rally.
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“We expect a volatile year ahead for the Chinese equities market with a conflux of forces pulling and pushing the markets,” said James Wang, head of China strategy, UBS Investment Bank Research.
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Near-term challenges include US trade tariffs, uncertainty around US policies against China, and retail inflows showing signs of plateauing, Wang said, expecting a 5% potential downside until the end of the first quarter next year.
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The Biden administration is set to unveil new export restrictions on China as soon as this week, and the new regulations could add up to 200 Chinese chip companies to a trade restriction list.
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In addition, the nomination as US Treasury Secretary of fund manager Scott Bessent, who worked for billionaire investor George Soros and noted short-seller Jim Chanos, stirs concerns of a possible financial war against China.
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China-listed tech stocks slumped on Monday. An index tracking integrated circuit makers fell 1.3%, while the tech-focused STAR 50 Index lost 1.2%.
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Bucking the sombre mood, an index of green vehicle makers rose 1.6% on news that Brussels and Beijing were nearing a solution over tariffs on Chinese electric vehicle imports into the bloc.
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In Hong Kong, tech and property shares led the declines.
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