Hong Kong-Listed Chinese language Shares Brace for Trump Tariffs’ Impression

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(Bloomberg) — Chinese stocks listed in Hong Kong will come under renewed pressure when they resume trading on Monday following a three-session break, after US President Donald Trump fired the first salvo of his tariff war.

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Fears of rising levies had already helped push the MSCI China Index into a bear market last month. On Saturday, Trump ordered general tariffs of 25% on Canada and Mexico and 10% on China, to come into effect on Tuesday, while promising a similar move later for the European Union. The Nasdaq Golden Dragon Index fell 3.5% on Friday, marking its worst day in seven weeks. 

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The brand new tariffs may curtail China’s merchandise exports, dragging on the nation’s already struggling economic system. On-line retailers similar to Alibaba Group Holding Ltd. and Asia’s broader chip business are extra weak than others. China on Sunday vowed countermeasures and mentioned it might file a grievance with the World Commerce Group.

“China’s nascent restoration indicators may very well be disrupted,” mentioned Charu Chanana, chief funding strategist at Saxo Markets. The federal government “must strike a stability between responding to home and exterior headwinds,” she added.

Trump’s actions probably mark the start of a sequence of threatened commerce assaults, although he has to this point scaled again his deliberate actions in opposition to China. An govt order he signed on his first day in workplace, calling for a sequence of commerce evaluation reviews by April 1, may result in additional motion. Different Asian economies additionally could also be weak as they account for a good portion of the rise in US imports in recent times. An exodus of international buyers from the area’s equities since Trump’s election win, may speed up.

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Listed here are the shares and sectors more likely to react probably the most to extended commerce wars and tariffs.

On-line Retailers

Trump’s new commerce levies embody a broadside in opposition to e-commerce, with obvious plans to extinguish a long-held tariff exemption for packages price lower than $800. He curtailed so-called de-minimis exemptions for small parcels and packages despatched to the US from Canada and China, successfully making use of tariffs extra extensively, although the scope of the measure wasn’t instantly clear.

The choice seems to be primarily focused at lowering duty-free shipments from China, which is able to damage on-line retailers and e-commerce platforms like Alibaba.

Items similar to clothes, equipment, dwelling items, electronics and small sturdy objects from Shein and Temu alone account for 30% of all so-called de-minimis shipments, in line with analysis from Pablo Fajgelbaum at College of California, Los Angeles and Amit Khandelwal at Yale College.

Learn: Trump Tariffs Goal Loophole Utilized by Chinese language On-line Retailers

Chips

Semiconductor makers with gross sales to China, together with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., shall be in focus as Trump mentioned he’d tax chips — repeating that vow after his assembly Friday with Nvidia Corp. Chief Government Officer Jensen Huang. 

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In the meantime, shares of Chinese language chipmakers similar to Semiconductor Manufacturing Worldwide Corp. could rise, if tariffs are seen fanning the nation’s quest for industrial self-sufficiency. 

Learn: DeepSeek Renews Give attention to China’s Self-Reliance Bid: Taking Inventory

Chips have been on the heart of the continuing tech rivalry between the US and China, with Washington implementing tighter export controls geared toward limiting the stream of superior elements to China. In response, Beijing has enacted its personal restrictions.

This back-and-forth is more likely to escalate on condition that Chinese language startup DeepSeek’s low-cost synthetic intelligence mannequin is being seen by many as a risk to US dominance within the know-how.

Morgan Stanley strategists together with Daniel Blake reiterated warning on semiconductors, {hardware}, China, Taiwan and Korea in a word dated Feb. 1, citing broader dangers from approaching tariffs and potential investigations into China. 

“Taiwan and Korea are most uncovered when it comes to whole income share from exports to the US. Whereas they aren’t going through the primary section of tariff bulletins, we word the momentum in direction of each a common tariff and tariffs on important items, together with semiconductors,” they mentioned.

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Mexico Publicity, Assets 

Asian auto shares with publicity to Mexico, similar to Korea’s HL Mando Co. and Kia Corp. shall be on buyers’ radar. EV bellwether BYD Co., which is trying to construct its first Mexican manufacturing plant, can even be in focus. 

Mexico’s president on Sunday known as for retaliatory tariffs and different non-tariff measures on the US, whereas opening the door for the 2 sides to cooperate on safety and public well being points.

Amongst different themes in danger, Trump has additionally threatened to impose tariffs on a variety of imports within the coming months, together with on metal, aluminum, copper, oil and fuel, and prescribed drugs.

Inexperienced Power 

Shares related to inexperienced power stay weak as Trump has prioritized the manufacturing of fossil fuels, decreased the deal with environmental points, and threatened to evaluation a client tax credit score designed to encourage electrical automobile utilization. 

Shares of Korean electric-vehicle battery producers like Samsung SDI Co. and LG Chem Ltd. have dropped greater than 25% every since Trump’s election victory on Nov. 5, compounded by already bleak gross sales forecasts.

The outlook can also be grim for Chinese language photo voltaic corporations similar to Longi Inexperienced Power Know-how Co., which have confronted scrutiny from the U.S. for years whereas dominating world markets with lower-priced merchandise.

—With help from Sam Kim and James Mayger.

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