China, Hong Kong: Stocks extend fall on renewed US tariff threat

[SHANGHAI] China stocks continued to slide on Thursday, after US President Donald Trump vowed not to back down on imposing new tariffs on Chinese imports, but there was no panic selling, with Monday's over 5 per cent plunge largely pricing in the penalty. Hong Kong shares also declined.

Fears of the rapidly escalating trade tensions were eased a bit by China inflation data suggesting demand may be starting to perk up thanks to Beijing's stimulus.

China's blue-chip CSI300 index fell 1.9 per cent, to 3,597.59 at the end of the morning session, while the Shanghai Composite Index lost 1.4 per cent to 2,854.71.

The Hang Seng Index dropped 2.0 per cent to 28,437.64, while the Hong Kong China Enterprises Index lost 1.9 per cent to 10,883.26.

Mr Trump said on Wednesday China "broke the deal" it had reached in trade talks, and vowed to impose new tariffs on Chinese imports unless Beijing "stops cheating our workers".

The US Trade Representative's office said tariffs on US$200 billion worth of Chinese goods would increase to 25 per cent from 10 per cent at 12:01am (0401) GMT on Friday. Beijing has announced it would retaliate if tariffs rise.

"This sudden shift highlights the continued threat that US protectionism poses to the global economy despite the recent lull in aggressive action from the Trump," Nomura said in a note.

China's CSI300 financial sector sub-index was lower by 1.85 per cent, the consumer staples sector down 3.82 per cent, the real estate index down 2.45 per cent and the healthcare sub-index down 3.13 per cent.

The smaller Shenzhen index was down 1.03 per cent and the start-up board ChiNext Composite index was weaker by 0.64 per cent.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 1.29 per cent while Japan's Nikkei index was down 1.10 per cent.

The yuan was quoted at 6.8075 per US dollar, 0.36 per cent weaker than the previous close of 6.7831.

The largest percentage gainers in the main Shanghai Composite index were Guangdong Dcenti Auto-Parts Stock, up 10.04 per cent, followed by L&K Engineering Suzhou, gaining 10.03 per cent and UE Furniture, up by 10.03 per cent.

The largest percentage losers in the Shanghai index were Kangmei Pharmaceutical, down 10.06 per cent, followed by Wuhan Xianglong Power Industry, losing 10.03 per cent and Jiang Su Suyan Jingshen, down by 10.02 per cent.

REUTERS