Chinese and Hong Kong Stock Markets Plummet Amid Escalating Trade Tensions
Mainland China's and Hong Kong's stock markets opened with significant losses as the latest round of tariffs threatened by U.S. President Donald Trump came into effect. The Shanghai and Shenzhen Stock Exchanges’ benchmark indices witnessed declines of 23 and 26 points, respectively, just minutes after trading commenced on Wednesday. The Shanghai Composite Index fell approximately 65 points, while the Shenzhen index experienced a drop of about 250 points.
This downturn follows a tough trading session earlier in the week where the exchanges had already declined by 734 and 966 points, respectively, after the release of countermeasures announced by Chinese authorities last Friday. These countermeasures comprised an additional 34% tariffs on U.S. products, amidst rising fears of a looming global recession fueled by these trade tensions between the two largest economies worldwide.
On Tuesday, the Shanghai and Shenzhen Exchanges managed to recover slightly, climbing by 158 and 0.64 points, respectively, thanks to support measures from state investment institutions in China.
The main index of the Hong Kong Stock Exchange, the Hang Seng, similarly fell around 324 points shortly after opening, with losses exceeding 600 points just minutes into trading, pushing it below the critical 20,000-point mark. The index had already taken a hit on Monday, tumbling 132 points due to growing concerns about economic downturns stemming from the ongoing trade discord, although it managed a small rebound of 151 points on Tuesday.
As confirmed by White House spokesperson Karoline Leavitt, the batch of additional 50% tariffs threatened by Trump against Chinese imports officially went into effect on Wednesday. This brings the total tariff rate on Chinese goods to at least 10%. In retaliation, China implemented a series of countermeasures against U.S. products, which also come on the back of heightened tensions. These measures include tariffs of 34% on U.S. imports, sanctions on specific American companies, limitations on certain rare earth exports, and the suspension of imports of chicken and sorghum from some U.S. firms.
Additionally, China is pursuing antitrust and antidumping investigations against firms and products originating from the U.S. The Ministry of Commerce of China issued a strong condemnation regarding the coercive actions of the United States, emphasizing that China will continue to 'fight until the end' in this escalating trade conflict.
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