Hong Kong Hang Seng gains on bargain hunting

Headline indices of the Hong Kong share market closed higher on Thursday, 12 July 2018, as investors chased for bottom fishing a day after a bruising selloff amid fears of an escalation in the U.S.-China trade war after the United States said it would impose tariffs on an extra 200 billion worth of Chinese imports and China said it would retaliate. At the close of trade, the Hang Seng Index added 205.92 points or 0.73% to 28,517.61. The Hang Seng China Enterprises Index rose 111.07 points or 1.04% to 10,769.33.

The Chinese and U.S. officials have raised the prospect of resuming talks over trade between the two nations after President Donald Trump ratcheted up the pressure by announcing a huge new round of potential tariffs. Washington and Beijing now have about seven weeks to strike a deal or dig in for a trade war that could upend corporate supply chains and raise prices for consumers around the world.

Local market suffered heavy losses yesterday after the Trump administration raised the stakes in its trade war with China on Tuesday, saying it would slap 10% tariffs on an extra $200 billion worth of Chinese imports. U.S. officials released a list of thousands of Chinese imports the administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum. It also includes consumer goods ranging from car tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.

China's government said it will take firm and forceful measures if the new tariffs are enacted. That response probably would include measures other than tariffs. Trump has threatened to put new taxes on almost everything the United States imports from China.

The U.S. tariffs on $200 billion of Chinese goods are scheduled to take effect after Aug. 30, when the Trump administration's consultation process ends.

Last week, Washington imposed 25% tariffs on $34 billion of Chinese imports, drawing immediate retaliatory duties from Beijing on US imports in the first shots of a heated trade war. US President Donald Trump had warned then that his country may ultimately impose tariffs on more than $500 billion worth of Chinese imports.

Shares of Yangtze Optical Fibre, which claims to be the world's largest supplier of optical preform and fibre, surged 8.6 per cent to HK$31.75, after the US and ZTE signed an agreement paving the way for China's number two telecommunications equipment maker to resume business with its American suppliers. The ban on ZTE, in place for nearly three months, will be removed once the company deposits US$400 million in an escrow account, the US Commerce Department said on Wednesday. In response, ZTE climbed 23 per cent to HK$13.70. ZTE shares have lost about 59 per cent of their value since November.

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