Trump said he would impose an additional 10 per cent tariff on goods from China
Hong Kong stocks hovered around a two-month low as investors assessed the impact of additional tariffs that US president-elect Donald Trump said he would impose on Chinese imports.
The Hang Seng Index rose less than 0.1 per cent to 19,159.20 at the close. The Hang Seng Tech Index dropped 0.3 per cent. On the mainland, the CSI 300 Index slipped 0.2 per cent and the Shanghai Composite Index eased 0.1 per cent.
Chinese search giant Baidu surged on media reports that its autonomous ride-hailing platform would start a trial operation in Hong Kong. Chow Tai Fook Jewellery Group slumped before its earnings release later on Tuesday.
On social media Monday, Trump said he would impose an additional 10 per cent tariff on goods from China as well as a 25 per cent levy on all imports from Canada and Mexico. Earlier, he threatened to apply a universal 60 per cent tariff on all Chinese imports, a rate that UBS said would reduce China’s growth by 2.5 percentage points.
The new tariffs are aimed at forcing the three nations to bolster border security and crack down on fentanyl shipments to the US, Trump said. He accused China of failing to deliver on promises to apply the death penalty to fentanyl traffickers, writing that “drugs are pouring into our country, mostly through Mexico, at levels never seen before.”
“The market has already fully expected the tariff stuff and priced in the worst-case scenario,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “A 10 per cent tariff is lower than expected. But that doesn’t mean that’ll be the final decision, given that Trump hasn’t taken office yet. So we’ll still face some uncertainty on the tariff issue.”
The Trump tariff news could remove some of the clouds that have been hanging over Hong Kong and Chinese stocks. Sentiment in the two markets has deteriorated recently after China’s fiscal stimulus disappointed investors and worries about geopolitical tensions intensified after Trump’s re-election. Investors are now waiting for more clarity on policies from Beijing’s top leaders, who are set to convene next month to set the tone for the economic agenda.
Goldman Sachs expects the Trump administration will apply an additional 20 per cent tariff on Chinese imports, which would reduce China’s export growth to almost zero next year from a double-digit increase this year, the investment bank said in a report on Tuesday. Under that scenario, China’s economic growth would slow to 4.5 per cent in 2025 from an estimated 4.9 per cent in 2024, Goldman said, adding that Beijing would cut interest rates and ramp up fiscal support to counter the blow.
Baidu surged 4.2 per cent to HK$81.10. Meituan rose 1.4 per cent to HK$164.30. On Friday, China’s biggest on-demand delivery firm could report that its third-quarter net income surged 164 per cent from a year earlier based on global accounting standards, according to the estimates of analysts tracked by Bloomberg.
Chow Tai Fook lost 3 per cent to HK$6.86. Its net income for the six months to September likely fell 31 per cent from a year earlier, according to Bloomberg data.
CNSIG Anhui Hongsifang Fertilizer jumped 20 fold from its offering price to 160.99 yuan on its first day of trading in Shanghai.
Other major Asia-Pacific markets edged lower. Japan’s Nikkei 225 slipped 0.9 per cent, South Korea’s Kospi retreated 0.6 per cent and Australia’s S&P/ASX 200 lost 0.7 per cent.