Hang Seng tumbles the most since 2008, closes below the 20,000 mark

The Hang Seng plunged 3,021 points or 13.2% on Monday, marking its steepest one-day loss since 2008, to end below the 20,000 mark at 19,828. This marked the second consecutive session of heavy selling, dragging the index to an over two-month low as most sectors, particularly tech, consumer, and financials, posted double-digit losses.

Hang Seng tumbles the most since 2008, closes below the 20,000 mark

The sharp decline was largely attributed to escalating trade tensions between the U.S. and China. The White House remained resolute in its stance on tariff plans, with President Trump reiterating that no trade deal would be made until the U.S. trade deficit was addressed. In retaliation, China announced levies on U.S. goods, further heightening fears of a prolonged trade war that could dampen global growth. Investors, already on edge, were rattled by Trump's comments that markets would "have to take their medicine," a signal that the administration was prepared for the short-term economic pain in the hopes of achieving a more favorable trade balance. This rhetoric deepened recession fears, with U.S. futures sinking as a result, signaling concerns that the escalating tensions could lead to an economic slowdown both domestically and globally.

The losses were widespread

The losses on the Hang Seng were widespread, with several major companies taking heavy hits. Pop Mart plummeted 22.9%, Prada Spa dropped 14.7%, CK Hutchison fell 8.9%, Xiaomi lost 21.1%, Semicon Manufacturing dropped 17.7%, Meituan slid 15.4%, and Tencent saw a significant decline of 13.3%. These major decliners highlighted the broad impact the downturn was having on Chinese and Hong Kong-based companies, many of which were already grappling with weakened consumer sentiment and reduced demand. However, losses were somewhat capped after Bloomberg News reported that China may cut borrowing costs and reduce the Reserve Requirement Ratio (RRR) to provide liquidity to the economy. Furthermore, Chinese policymakers were said to be speeding up stimulus measures aimed at boosting domestic consumption and stabilizing the economy, which offered a glimmer of hope to investors. Despite these potential policy responses, the outlook for both the Hang Seng and global markets remained highly uncertain as trade tensions and fears of a deeper economic slowdown continued to dominate sentiment.