Trump tariff fears drag HSI below 20,000

Cici Cao

Hong Kong stocks crashed through the 20,000 mark to a month's low as the yuan dropped to a three-month low against the US dollar over US President-elect Donald Trump's tariff threat.

FWD Group chairman and former secretary for financial services and the treasury, Frederick Ma Si-Hang, said many companies are prepared to relocate their supply chains to regions outside China to avoid the tariffs expected to be in excess of 60 percent.

Mainland stocks also dropped as the yuan weakened against the US dollar. Sino-US tensions are expected to intensify during Trump's second term.

Hang Seng Index extended the loss yesterday, closing at 19,846 points, above the 19,129 level on September 25 when China announced its biggest stimulus package since the pandemic to pull the economy out of a deflationary threat. Three major indexes of A shares all declined in afternoon trading, dragged down by financial-related stocks. The Shanghai SSE Composite Index, for example, shed 1.39 percent.

The offshore yuan once weakened to 7.25054 per dollar, hitting a three-month low.

In Hong Kong, medical stocks leaped on China's announcement of improvement plans for an advance payment system for basic medical insurance funds.

WuXi AppTec (2359) gained 1.42 percent, WuXi XDC Cayman (2268) jumped 7.46 percent and Sinopharm Group (1099) rose 2.17 percent.

AIA Group (1299) announced that the National Financial Regulatory Administration Chongqing Bureau has permitted AIA China to establish a new branch in the Chongqing Municipality, following the opening of branches in Anhui Province and Shandong Province.

Its share price declined 2.56 percent to HK$59 yesterday.

Meanwhile, bitcoin roared to an all-time high of US$89,637 (HK$699,168) in anticipation that Trump's second term will bring equities-boosting tax cuts and deregulations.

In other news, FWD's Ma said Hong Kong's status as a container port and ranking in the cultural industry had been taken over by competitors in the past 20 years, with its technological development also falling behind.

Speaking at a forum organized by Macau-based Delta Asia Financial Group, Ma urged the Hong Kong government to actively promote the initiatives mentioned in the policy address, saying he was pessimistic about China-US relations but expressing belief that it is still possible for the two economies to cooperate.