Hong Kong Stocks Rebound After Sharp Drop as Trump’s Tariff War Weighs on Markets
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The Hong Kong Exchange
Amid U.S. President Donald Trump’s renewed tariff war and the Federal Reserve tempering expectations of a rate cut, Hong Kong stocks opened lower in the Year of the Snake, with the Hang Seng Index dropping more than 2% before recovering the 20,000 mark by midday.
Despite the turbulence, market consensus suggests that the impact of tariffs is largely priced in, with some tech stocks defying the trend.
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- Amid U.S. tariff hikes and adjusted Federal Reserve expectations, Hong Kong's Hang Seng Index initially dropped over 2%, recovering to close slightly above 20,000 points.
- Market analysts suggest tariff impacts are priced in, with select tech stocks defying negative trends; semiconductor and AI sectors show resilience.
- Hong Kong maintains its appeal as a listing hub, with Financial Secretary Paul Chan affirming confidence despite global market tensions.
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Who’s Who
- JD Health International Inc.
- JD Health International Inc. experienced a significant drop of nearly 10% in the morning trading session outlined in the article. It was one of the 80 out of 83 Hang Seng constituent stocks that declined despite some rebound in the market by midday. The decline in JD Health stocks occurred alongside broader market impacts due to tariff announcements and slowed rate cut expectations.
- JD.com Inc.
- JD.com Inc. experienced a 6.2% decline in its stock price during morning trading. Additionally, its subsidiary, JD Health International Inc., saw a nearly 10% drop. The broader market context includes a decline in the Hang Seng Index amid U.S. tariff announcements and a high-interest-rate environment affecting local stocks. Despite the overall market downturn, some technology stocks showed resilience.
- Li Auto Inc.
- Li Auto Inc. experienced a decline of up to 8.3% after reporting a 4% year-on-year decrease in deliveries. Despite the broader market's downward trend, Li Auto's significant drop was among the notable declines in the Hang Seng Index's constituent stocks amid the turbulence in Hong Kong markets influenced by U.S. tariffs and other economic factors.
- Haidilao International Holding Ltd.
- Haidilao International Holding Ltd., a hotpot restaurant chain, experienced a decline of 7.2% during Hong Kong's trading session. Despite the overall market turbulence due to U.S. tariffs and other economic pressures, Haidilao's stock was among those that saw significant losses in morning trading before the market attempted some recovery by midday.
- Li Ning Co. Ltd.
- Li Ning Co. Ltd., a sportswear maker, experienced a significant decline in the Hong Kong stock market, losing 7.6% in morning trading. This drop occurred amid broader market turbulence driven by U.S. tariff announcements and inflation concerns, affecting a majority of Hang Seng constituent stocks. Despite market fluctuations, some analysts believe the impact of tariffs is already priced in.
- Semiconductor Manufacturing International Corp.
- Semiconductor Manufacturing International Corp. defied the trend with its shares surging 8.4%, making it the best-performing blue-chip during the session. This performance is notable amid a generally declining market, highlighting the company's strong position despite broader market challenges and tariff concerns.
- DeepSeek
- DeepSeek is a Chinese artificial intelligence (AI) startup that has disrupted the U.S. tech sector, contributing to expectations of a revaluation of Chinese tech stocks.
- Alibaba Group Holding Ltd.
- Alibaba Group Holding Ltd. surged up to 7% on a Monday morning after announcing its upgraded Qwen 2.5-Max AI model, which it claimed outperformed competitors like ChatGPT, Meta's Llama, and DeepSeek. By midday, the gains moderated to 6.3%.
- Baidu Inc.
- Baidu Inc. experienced significant volatility, slumping as much as 8.5% in the morning before closing the session down 5.7%. This decline occurred amid a broader market trend and in contrast to some Chinese tech stocks, such as Alibaba, which saw gains due to its AI advancements.
- Kingsoft Cloud Holdings Ltd.
- Kingsoft Cloud Holdings Ltd., a Chinese AI stock, surged 34.5% during the trading session mentioned in the article. This significant rise was amid various market fluctuations and announcements, suggesting a positive market reaction towards its performance or potential amidst broader tech disruptions.
- UBS
- A UBS report estimated that a 10% tariff on Chinese goods would reduce China's GDP growth by 0.3 to 0.4 percentage points due to weakened exports, investment, and consumption. The report also suggested that slower U.S. growth could further impact China's economy, potentially pushing inflation down by 0.2 percentage points.
- Morgan Stanley
- The article mentions that a Morgan Stanley report projected a 0.3 percentage-point hit to China's GDP due to the impact of U.S. tariffs on Chinese goods, aligning with UBS's assessment of the potential economic slowdown resulting from weakened exports, investment, and consumption.
- BNP Paribas Wealth Management
- Grace Tam, chief investment adviser at BNP Paribas Wealth Management in Hong Kong, noted that the market had largely factored in tariff risks, possibly even overreacting. She suggested that positive catalysts could drive the Hang Seng Index back above 21,000, indicating BNP Paribas' outlook on the Hong Kong market remains cautiously optimistic despite current challenges.
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What Happened When
- Jan. 29, 2025：
- The Federal Reserve keeps interest rates unchanged and signals a slower pace of rate cuts.
- Feb. 2, 2025：
- UBS releases a report estimating the impact of a 10% tariff on Chinese goods.
- Feb. 2, 2025：
- Alibaba Group unveils its upgraded Qwen 2.5-Max AI model, leading to a surge in stock prices.
- Feb. 2, 2025：
- Financial Secretary Paul Chan speaks at the Hong Kong Stock Exchange's Lunar New Year opening ceremony.
- Feb. 3, 2025：
- Trading in Hong Kong resumes after the Lunar New Year break.
- Before Feb. 2025：
- U.S. President Donald Trump renews the tariff war and the Federal Reserve tempers expectations of a rate cut.
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