Hang Seng dips over 3% at close, yet soars 13% monthly

The Hang Seng Index plunged by 777 points, or 3.3%, to close at 22,941 on Friday, marking its second consecutive day of losses. This downturn follows the United States' imposition of a 10% tariff on Chinese imports, which compounds the 10% levy that was already put in place on February 4, bringing the total tariff to 20%.

Hang Seng dips over 3% at close, yet soars 13% monthly

In retaliation, China has vowed to take all "necessary" countermeasures, further escalating the already tense trade relationship between the two largest economies in the world. This trade conflict has sent shockwaves through global markets, and Hong Kong's benchmark index was not immune to the fallout. As a result, the market extended its pullback from a recent three-year high, finishing down 2.3% for the week, with broad-based losses affecting nearly every sector.

Worst performers on Friday

Among the hardest hit was the tech sector, where the tech index plummeted by 5.3%, largely due to disappointing earnings from Nvidia, a key player in the global semiconductor industry. This prompted a wave of profit-taking in several stocks, including Horizon Robotics (-14.0%), Sunny Optical Tech (-8.3%), Meituan (-6.7%), and Tencent Holdings (-3.5%). The negative sentiment was not confined to technology stocks, however, as the property, financials, and consumer sectors also saw sharp declines. These sectors were weighed down by growing concerns ahead of China's official PMI (Purchasing Managers' Index) data, which was scheduled for release on Saturday. Investors were apprehensive about the potential impact of the data on China's economic outlook, particularly given the fragile recovery in the country amid ongoing geopolitical tensions.

February trend remain positive

Despite the challenging day and week for the Hang Seng, the broader trend in February remained positive. The index surged by 13.4% over the month, marking its third consecutive monthly rise. This strong performance reflected optimism that China's upcoming "Two Sessions" gathering next week could introduce new policy measures aimed at boosting economic recovery. The Two Sessions, which include meetings of the National People's Congress and the Chinese People's Political Consultative Conference, are expected to address key issues such as economic stimulus, regulatory reforms, and potential strategies to stabilize the economy amid both domestic and international challenges. While the tariff dispute and other headwinds have weighed on investor sentiment in the short term, there remains hope that these policy measures will provide a much-needed boost to both the Chinese and broader regional economies in the months ahead.