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
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.
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.
“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.
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.
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.
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.
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%.
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.
In Hong Kong, tech and property shares led the declines.