Markets plunge in China, Hong Kong as first salvoes fired in Sino-US trade war

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Stock price movements displayed on a screen at a securities company in Beijing on Friday. Photo: AFP

Karen Yeung

Published: 9:08am, 23 Mar 2018Updated: 11:03pm, 23 Mar 2018

Stock markets plunged in Hong Kong, Shanghai and Shenzhen as the two largest economies in the world fired the first salvoes of their trade war, putting the stability of global commerce at peril.

US President Donald Trump signed a presidential memorandum to impose tariffs on Chinese imports valued at US$60 billion, fulfilling his campaign promise to close a trade deficit spawned by what he called unfair trade practices.

China retaliated by announcing 15 per cent import tariffs on 120 types of US products including fruit, wine and steel pipes, valued at US$977 million. A 25-per cent levy could be slapped on another eight categories of American imports including pork and recycled aluminium, valued at US$2 billion.

“Both sides seem to have a planned course of action right from the beginning,” said Ben Kwong Man-bun, a director at brokerage firm KGI Asia. “Safe-haven sentiment is strong across all market sectors, but especially among large caps and those which have risen a lot,” which prompts investors to sell their holdings to take cover, he said.

A tit-for-tat spat between the two countries – with US$520 billion of trade between them as of 2016 – imperils the entire world, weighing down on almost every equity market in the Asia-Pacific region from Seoul to Auckland. Karachi and Laos were the only two stock markets that recorded gains.