HONG KONG: China and Hong Kong stocks fell on Wednesday after US President Donald Trump hinted at new tariffs on Chinese imports, ending a brief reprieve for the markets.
China’s blue-chip CSI 300 Index declined 0.9% the by midday break, heading for what could be its biggest one-day retreat in nearly two weeks, while the Shanghai Composite Index lost 0.8%.
Hong Kong’s benchmark Hang Seng Index fell 1.3%, pulling back from a one-month high.
The onshore yuan weakened around 0.2%, despite the midpoint being fixed at over a two-month high by the central bank.
Trump said on Tuesday that his administration was discussing imposing a 10% punitive duty on Chinese imports as early as next month because fentanyl is still being sent from China to the US via Mexico and Canada.
That put an end to short-lived relief in Tuesday’s Asian trading hours, after Trump held off announcing any China-specific tariffs on his first day back in office on Monday.
“We believe that Trump may be seriously considering how to maximize the use of tariffs for his political purposes” and the related negotiation process will be rather turbulent,analysts at Kaiyuan Securities said in a note.
During his election campaign, Trump vowed to impose steep tariffs of 60% on goods from China to help reduce a trade deficit that now tops $1 trillion annually.
If tariffs are hiked eventually, it could deal a heavy blow to the world’s second-largest economy, which has been struggling with a protracted property crisis and weak consumer demand weighing heavily on economic activity.
China, HK stocks rally as Trump-Xi call calms nerves
Leading declines onshore, the real estate sector tumbled 3.4%, paring gains made the previous day.
China’s chip sector also gave up earlier gains to decline 0.6%, after Trump announced a private sector investment of up to $500 billion to fund infrastructure for artificial intelligence to outpace rival nations.
Comments