China and Hong Kong stocks decline as US$200 billion tariffs loom to cloud growth outlook
Trading volumes were light on Thursday in Shanghai and Hong Kong as investors stay on the sidelines
China and Hong Kong stocks both retreated on Thursday, as investors awaited the White House’s decision on whether to slap an additional US$200 billion of tariffs on imports from the Asian nation.
The Shanghai Composite Index fell 0.5 per cent at the close and Hong Kong’s Hang Seng Index shed 1 per cent. Trading was light as traders stayed on the sidelines, keeping a close watch on the latest development on the trade war between the world’s two largest economies. The daily trading volumes on the Shanghai bourse were about a fifth below the 30-day average and those in Hong Kong were 2.6 per cent lower, according to Bloomberg data.
Thursday was the last day for the American public to provide feedback on the US$200 billion tariffs the Trump administration has proposed on Chinese imports. Data seems to be adding pressure on Washington to follow through the proposal as the US’ trade deficit with China widened to a record US$36.8 billion in July and its overall gap with the rest of the world increased to US$50.1 billion, according to the latest data from the Commerce Department.
The US has already levied US$50 billion tariffs on Chinese goods, with China retaliating with similar measures.
“Everyone in the market is waiting for the result and no one would make big money action before that comes,” said Wu Kan, a fund manager at Shanshan Finance in Shanghai. “When the window period has passed, and whether the tariffs take effect or not, a hanging sword will be removed from the market to give investors a respite.”
The day’s decline put the Shanghai Composite less than 1 per cent shy of a 31-month low that was seen in August, while the Hang Seng Index remained 1.7 per cent away from entering a bear market.