SHANGHAI: Mainland China stocks pared gains and closed largely flat on Wednesday, weighed by persistent worries over a possible escalation in global trade tensions, while auto shares drove Hong Kong market higher.
At the close, the Shanghai Composite index was down 0.04% at 3,368.70 points, while the blue-chip CSI300 index lost 0.3%.
In Hong Kong, the benchmark Hang Seng index rose 0.6% to 23,483.32 points, and the Hang Seng China Enterprises index rose 0.44% to 8,654.26.
Sino-U.S. trade relations have been front and centre of investors’ minds, especially with the U.S. on track to impose reciprocal tariffs on a number of trading partners on April 2.
U.S. President Donald Trump is considering a two-step approach to his new tariff regime next week, the Financial Times reported, citing unnamed sources.
“China was the primary target of U.S. tariffs previously but most U.S. trading partners could see higher tariffs in Trump’s second term,” Goldman Sachs said in a note published on Wednesday, following meetings with Asian, U.S. and European investors in the past month.
China and HK stocks close higher, investors focus on tariff developments
“Some investors believe that China appears better placed to deal with the external demand headwinds now, compared to the Trade War 1.0 seven years ago, thanks to its reduced direct exports to the U.S. and improved product competitiveness.”
Morgan Stanley raised its index targets for Chinese shares for the second time this year, citing improved earnings growth forecasts and a more optimistic outlook for the economy and currency.
The U.S. added six subsidiaries of Inspur Group, China’s leading cloud computing and big data service provider, and dozens of other Chinese entities to its export restriction list on Tuesday.
In Hong Kong, auto shares were among the top gainers lifting the market higher, with a sub-index that measures the performance of the sector gaining 1.79%.
Chinese electric vehicle giant BYD aims todouble its sales outside China to over 800,000 cars in 2025 and will look to overcome tariffs by assembling cars locally, its chairman told analysts on an earnings call.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.44%, while Japan’s Nikkei index closed up 0.65%.
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