HONG KONG: China’s yuan weakened in early Asian trades on Wednesday and Hong Kong stocks fell as opinion polls and preliminary counting tallies from the US election still showed a tight presidential race.

US stock futures and the dollar were up slightly, as some tallies pointed to President Donald Trump making gains over Vice President Kamala Harris in battleground states.

China’s blue-chip CSI300 Index climbed 0.17% at the open, while the Shanghai Composite Index gained 0.24%. Hong Kong’s benchmark Hang Seng was down 1.02%.

China stocks higher as PM expresses confidence in economic recovery

The US presidential election will have a meaningful impact on China’s economy and capital markets. As part of his pitch to boost American manufacturing, Trump has promised voters he will impose tariffs of 60% or more on goods from China.

Overnight, US-listed Chinese stocks rose 1.6%.

The offshore yuan fell more than 0.5% versus the dollar.

Trump’s proposed tariff and tax policies are seen as inflationary and therefore likely to keep US interest rates high and undermine currencies of trading partners.

During Trump’s first presidency, the yuan weakened about 5% against the dollar during the initial round of US tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.