You are here
Hong Kong: Stocks plunge on trade war fears
[SHANGHAI] Shanghai and Hong Kong stocks plunged Tuesday on fears that the US and China could be heading for a full-blown trade war following tit-for-tat tariff threats.
The sell-off followed a threat by Donald Trump that he would impose 10 per cent tariffs on hundreds of billions of dollars worth of Chinese imports, a move Beijing labelled "blackmail" and warned it would respond to in kind.
The news sent equities plummeting across Asia, led by mainland Chinese markets.
The benchmark Shanghai Composite Index, which ended down 3.78 per cent, or 114.08 points, at 2,907.82, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, tumbled 5.77 per cent, or 97.60 points, to 1,594.05.
The Hang Seng Index in Hong Kong fell 2.78 per cent, or 841.34 points, to close at 29,468.15, having pared earlier sharp losses.
It is the first time the Shanghai index has dipped below 3,000 since September 2016, according to Bloomberg.
Qian Qimin, an analyst of Shenwan Hongyuan Group, said the number was a psychological threshold for investors.
"Now the defence line has been broken, people are panicking and we are seeing some irrational behaviour," Qian said.
"The market is really weak right now and there is still uncertainty."
Zhang Gang, a Shanghai-based strategist with Central China Securities, told Bloomberg News: "Investors are worried the US may impose further restrictions on Chinese tech and internet products and cause greater uncertainty for the domestic economy.
"The Shanghai Composite is unlikely to bottom out any time soon."