The Hang Seng Index lost 136 points, or 0.6%, to close at 23,342 on Monday, reversing early gains amid losses across most sectors. The market pulled back from its highest level in over three years, with the tech index dropping 1.1% ahead of Nvidia’s earnings release later this week, as investors remained cautious.
Hang Seng turns early gains to finish in the red
Despite a rally in US futures, traders appeared to be digesting the latest geopolitical and economic news, which weighed on sentiment. A key factor was a report that US President Trump had issued a memorandum directing a key government committee to limit Chinese investment in US tech, energy, and other strategic sectors. The US also proposed imposing new fees on commercial ships made in China, aiming to curb the country's dominance in global vessel production, adding to the already tense trade relationship.
Beijing urged Washington to stop politicizing economic and trade issues
In response, Beijing urged Washington to stop politicizing economic and trade issues, further escalating tensions between the two economic giants. The uncertainty surrounding these developments created a risk-averse environment, leading to significant declines in major Chinese companies. Cosco Shipping sank 4.4%, while tech giants like Kuaishou Tech. (-5.4%), Hansoh Pharmaceutical (-4.0%), and Tencent Holdings (-3.2%) posted deep losses, as investors fretted over the potential impact of US policies on Chinese firms.
Best and worst performers
However, not all stocks followed the downward trend. China Vanke saw a 3.6% jump after Shenzhen Metro provided a CNY 4.2 billion loan to help the property developer repay its bond principal and interest. The news provided a much-needed boost to the construction sector, amid concerns over China’s struggling real estate market. Overall, the mixed performance across sectors reflected investor caution, as they navigated the geopolitical tensions between the US and China while also weighing potential earnings from major tech companies like Nvidia later in the week. Market participants will likely continue to focus on the evolving US-China trade dynamics, along with upcoming corporate earnings reports, as they try to gauge the outlook for global markets.
