Hong Kong stocks dropped by the most in nearly two months on Friday after US President Donald Trump said he would double the tariff on Chinese imports, escalating the trade war with Beijing and raising the risk of slowdowns in the world’s two largest economies.
The Hang Seng Index slumped 2.2 per cent to 23,195.63 as of 11.17am local time, heading for its most substantial drop since January 2. The decline trimmed the month’s gains to 15 per cent.
The Hang Seng Tech Index slumped 3.8 per cent. On the mainland, the CSI 300 Index slid 0.8 per cent and the Shanghai Composite Index fell 0.9 per cent.
Chinese technology stocks that have been riding the DeepSeek wave led declines. Alibaba Group Holding, owner of the Post, fell 3.5 per cent to HK$130.90 and Tencent Holdings slid 1.9 per cent to HK$486.20. Meituan lost 3.6 per cent to HK$167.
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The declines tracked an overnight rout in US stocks and losses for Asia-Pacific markets on Friday, as global traders rotated out of equities and into Treasuries on concerns that entrenched inflation in the US and the Trump administration’s tariffs would lead to stagflation in the American economy. The new tariff also risks disrupting China’s exports, which were the biggest contributor to the nation’s economic growth last year.
The Nasdaq-100 index slumped almost 3 per cent overnight to its lowest level since November. In Asia, Japan’s Nikkei 225 slid 2.7 per cent, South Korea’s Kospi retreated 2.5 per cent and Australia’s S&P/ASX 200 lost 0.8 per cent.
“The market hasn’t fully priced in the threat of Trump’s tariffs to China and to some extent [it] ignored the potential drag on the economy,” said Chen Meng, an analyst at Soochow Securities.
The new tariff risks stifling a rally in Chinese stocks spurred by the breakthrough in artificial intelligence technology by start-up DeepSeek, which launched a cheaper but high-performing chatbot. The Hang Seng Index has risen 15 per cent this year, making it the best performer among the major stock markets globally, while the Hang Seng Tech Index entered a bull market this month after a 20 per cent gain from a January low.
Trump said on Truth Social that the US would apply an additional 10 per cent tariff on imports of Chinese goods, adding to the 10 per cent levy that was put in place when he took office. The president also said the 25 per cent tariffs on Canada and Mexico would be effective next week.
More from South China Morning Post:
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