China and Hong Kong stocks fall as US set to slap US$200 billion in tariffs on Chinese goods
China and Hong Kong stocks fell on expectations that the administration of US President Donald Trump will follow through with its proposed tariffs on US$200 billion worth of Chinese imports early this week.
The Shanghai Composite Index slid 1.1 per cent on Monday, reflecting a more than three year low on a closing basis. Hong Kong’s Hang Seng Index slumped 1.3 per cent. Trading was not disrupted by Typhoon Mangkhut, which was downgraded to a No 3 signal by the city’s observatory from Sunday’s No 10 level.
In a tweet late Monday in Hong Kong, Trump repeated his view that countries which were not making fair deals with the US should be “tariffed”. “Tariffs have put the U.S. was in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!’,” he said.
News reports and market reactions indicated that the White House will impose the tariffs after a public-comment period concluded early this month. CNBC said in a tweet, citing a senior administration official, that the announcement might come Monday or Tuesday, and Bloomberg News reported that Trump instructed his aides last week to proceed with the proposal.
“Everyone is waiting for the boot to drop,” said Wei Wei, a trader with Huaxi Securities in Shanghai. “Before the official announcement on the tariffs, the market will remain pretty cautious and be set for some sell-off.”
The Shanghai Composite sank 29.85 points to 2,651.79, which reflected a poor start for mainland China-based foreigners who are allowed to trade in yuan-denominated A shares from Monday, after regulators revised trading rules to prop up the stock market.
The Hang Seng Index shed 353.56 points to 26,932.85. The Hang Seng China Enterprises Index, or the H share gauge, sank 1.1 per cent, or 113.08 points to 10,462.09.
In the mainland, pharmaceutical companies led declines on concern a new procurement method by public hospitals will bring down drug prices. Yunnan Baiyao Group, a maker of traditional Chinese medicine, tumbled 4.1 per cent to 70.30 yuan and Lepu Medical Technology plunged 6.6 per cent to 27.43 yuan.
Commodities also headed south. Wanhua Chemical Group lost 5.5 per cent to 39.88 yuan and Shandong Gold Mining fell 5.4 per cent to 22.22 yuan.
In Hong Kong, 45 of the 50 constituent members on the Hang Seng Index were lower.
AAC Technologies Holdings, an Apple supplier that counts on the US company for 57 per cent of its sales, fell 5.9 per cent to HK$77.55, the worst performing blue chip. Internet giant Tencent Holdings sagged 3.3 per cent to HK$319.20, knocking off 89 points off the benchmark index. Chinese investment bank CICC said in a report mainland online gaming stocks will continue to suffer from market volatility in the short term because of more stringent regulatory pressure, although the long-term outlook of the industry remained stable.
Sunny Optical Technology Group slid 5.3 per cent to HK$90.95, and e-book and online publishing website China Literature lost 3 per cent to HK$45.50.
J.P. Morgan reported that Typhoon Mangkhut was expected to have a negative impact on Macau gambling revenue in September after the government decided to temporarily close all casinos 11pm on Saturday through 8.00am on Monday, owing to safety concerns, the first time in history that casino operators were ordered to suspend businesses in the enclave.
Deutsche Bank cut its September gambling revenue growth forecast to 3 per cent from 14 per cent.
Galaxy Entertainment dropped 1.4 per cent to HK$49.15. However Sands China rose 1.3 per cent to HK$35.65, Wynn Macau gained 1 per cent to HK$19.44 and MGM China Holdings gained 1.6 per cent to HK$12.72.