HONG KONG: Chinese and Hong Kong stocks tumbled on Tuesday as investors booked profits and sought shelter in defensive plays, spooked by renewed Sino-US trade tensions that appear more entrenched than anticipated.
The Shanghai Composite index closed down 0.6 percent at 3,865.23 after climbing as much as 0.7 percent earlier in the session. The blue-chip CSI300 index ended 1.2 percent lower.
In Hong Kong, the Hang Seng Index dropped 1.7 percent to 25,441.35, extending its losing streak to seven sessions, the longest since January 2024. The city’s tech index plunged as much as 4 percent in its worst day since April.
The selling gathered paced in afternoon session as new fronts opened in the trade war. Beijing imposed sanctions on US-linked subsidiaries of South Korean shipbuilder, right after China and the US said they will slap implement additional port fees targeting each others’ vessels.
“The market’s reaction was too complacent yesterday so now it’s being corrected back down,” said Jason Chan, senior investment strategist at Bank of East Asia, predicting further near-term weakness.
Some investors also worry that so-called American allies could get involved to encircle China, risking a wider and more protracted trade conflict, he said.
The Dutch government’s move to take control of Chinese-owned chipmaker Nexperia sparked concerns about deeper technology-security tensions, weighing on sentiment toward Chinese tech asset.
Technology sectors led the retreat on Tuesday, with the CSI Semiconductor Industry Index down 6.9 percent and the CSI Artificial Intelligence Index falling 5.1 percent. Wingtech Technology, owner of Nexperia, tumbled by 10 percent daily limit.
Defensive sectors outperformed as risk appetite soured. China’s insurance sub-index and liquor makers each climbed nearly 3 percent, while banking shares added 2.5 percent.
Offering some hope for de-escalation, US Treasury Secretary Scott Bessent said that President Donald Trump remains on track to meet Chinese leader Xi Jinping in South Korea in late October.
“The recent sell-off indicates that the tit-for-tat trade conflict between the US and China isn’t going to end that easily, and this could impact markets even further ahead of Trump’s meeting with Xi Jinping towards the end of the month,” said Jeff Mei, COO at blockchain technology firm BTSE.
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