HONG KONG/SHANGHAI: A sharp sell-off in China stocks faded in choppy trading on Monday, allowing the market to trim early losses, as investors reassessed the impact of a renewed trade war between Washington and Beijing after taking profit to cut risks.
Analysts and fund managers believe the market downside will be limited compared to the panic-selling seen in April, when US President Donald Trump kicked off a global trade war with sweeping tariffs across the board.
The Shanghai Composite closed down 0.2 percent, after falling as much as 2.5 percent in early trade. The blue-chip CSI300 Index was 0.5 percent lower.
In Hong Kong, the Hang Seng benchmark tumbled as much as 3.5 percent before recovering some losses to end down 1.5 percent. The Hang Seng Tech index lost 1.8 percent.
Defying the broader selloff, however, China’s rare earth sector, which is at the centre of revived trade tensions, jumped more than 6 percent to a record high, while semiconductor stocks also gained 2.6 percent.
Trump on Friday unveiled additional levies of 100 percent on China’s US-bound exports, along with new export controls on critical software by November 1, in a reprisal against China curbing its critical rare earth exports.
Later he softened tones on Sunday, posting that everything would be fine and the US did not want to “hurt” China.
“President Trump reminded everyone that there are lots of uncertainties for markets,” said Ben Bennett, head of investment strategy for Asia at L&G Asset Management, based in Hong Kong.
He expects near-term wobbles in Chinese stocks after the strong rally of the past few months.
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