Chinese stocks sink after Trump tariff threat

HONG KONG (Nikkei Markets) — Hong Kong and mainland Chinese language markets have been on the right track for this 12 months’s worst day on Monday after U.S. President Donald Trump threatened to boost tariffs on Chinese language items, sparking fears the monthslong commerce talks between the 2 nations might unravel.

Trump on Sunday stated on Twitter that he plans to boost tariffs on $200 billion of Chinese language imports to 25% from 10% on Friday. He threatened to impose a 25% levy on a further $325 billion in Chinese language items.

The tweets got here at the same time as the 2 nations have been engaged in a number of rounds of negotiations in current weeks to resolve variations.

China is contemplating canceling a spherical of commerce talks that was set to start in Washington on Wednesday, The Wall Avenue Journal reported, citing an individual briefed on the matter on Monday. Bloomberg cited individuals conversant in the matter as saying that China is contemplating delaying the journey.

The market was caught without warning, stated Eddie Tam, chief funding officer at Central Asset Investments. “One factor Trump can’t ignore is that they have to make use of the China situation as a chip for U.S. presidential elections” in 2020.

Nevertheless, the report that Chinese language Vice Premier Liu He’ll cancel his journey means “China is just not that prepared to undergo threats, so the market might see deeper changes throughout the week,” Tam stated.

The Grasp Seng Index had shed three.three% to 29,086.74 by midday. Pork producer WH Group, which has vital pursuits within the U.S., fell eight.6%, main proportion positive aspects on the 50-stock gauge. Heavyweights Tencent Holdings and Ping An Insurance coverage declined four% and 5.four%, respectively.

Turnover on the Hong Kong Inventory Change’s most important board was at 78.99 billion Hong Kong ($10.07 billion) as of midday, increased than regular for the time of day, and considerably greater than what it was when China was closed final week.

Within the mainland, the Shanghai Composite Index slid 5.2% as buyers returned after a three-day market vacation. China’s blue-chip CSI300 index tumbled 5.5%. The yuan traded onshore misplaced zero.7% in opposition to the U.S. greenback to six.7812.

Markets in the remainder of the area additionally traded decrease, with Taiwan’s Taiex shedding 1.9% and Singapore’s Straits Occasions Index dropping three.5%. The Nikkei Asia300 Index declined 2.four%.

In the meantime, the Japanese yen, thought-about a safe-haven asset, climbed zero.5% in opposition to the dollar, whereas spot gold costs rose zero.four%. U.S. fairness futures pointed to a decrease opening on Wall Avenue. S&P 500 futures have been final down 2%.

“Within the close to time period, buyers are rightfully frightened,” Tai Hui, chief market strategist for Asia Pacific at J.P. Morgan Asset Administration, wrote in a notice. “Nevertheless, within the longer run, given President Trump’s relentless concentrate on the financial system and fairness market efficiency, a market pull again might strain him to rein in his rhetoric.”

In Hong Kong on Monday, handset maker FIH Cellular, a unit of Taiwan-listed Hon Hai Precision Business, or Foxconn, tumbled 9.6% after saying it expects to report a loss for the primary quarter and turnover for the interval may have fallen four.6% from a 12 months in the past.

Chipmakers listed in Hong Kong fell amid worries over the fallout from renewed commerce tensions, with ASM Pacific Know-how declining 7.2% and Semiconductor Manufacturing Worldwide sliding eight.three%.

Fred Wong, chief funding officer at eFusion Capital, stated that whereas he was undecided if Trump’s menace was only a “tactic or a closing choice,” he was inclined to imagine a full commerce settlement was “not straightforward,” provided that China might lead the worldwide growth of the ecosystem for fifth-generation telecommunications networks, or 5G.

Sunac China Holdings declined 5.6%. The property developer on Sunday reported an 11% enhance in April contracted gross sales, slowing from March’s 22% tempo of progress and an 84% year-over-year soar in April 2018 gross sales.

–Amy Lam

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