Hong Kong Market falls as trade war jitters continue

Hong Kong share market closed down on Wednesday, 08 May 2019, tracking falls in other Asian peers amid uncertainty over the next round of bilateral trade negotiations between US and China in Washington after U.S. President Donald Trump said he would raise existing tariffs on Chinese goods from Friday and impose fresh levies soon. At closing bell, the Hang Seng Index fell 1.23%, or 359.82 points, to 29,003.20. The Hang Seng China Enterprises Index dropped 1.45%, or 163.68 points, to 11,097.37.

US President Donald Trump's threat to increase tariffs on Chinese imports continues to send shock waves across global financial markets, sinking stocks in the US and Europe overnight. US stocks dropped by the most since March and equities in Europe closed at their lowest in five weeks. In the US, the Dow, S&P 500, and Nasdaq all finished the day solidly in the red, adding to their losses from Monday. The Dow fell about 473 points, marking the second-worst trading day of the year. The S&P 500 was down 1.7% and the Nasdaq fell 2%. European stocks fared poorly too. The FTSE 100, DAX, and CAC 40 all closed 1.6% lower. The pan-European Stoxx 600 fell 1.4%.

Mainland China stocks broadly succumbed to selling, as investors were disheartened by growing concern about U.S.-China trade talks in Washington between China and the United States, which have been clouded by the Trump administration's renewed threat to increase tariffs on Chinese goods.

Global stocks were ailing after President Donald Trump Sunday threatened further tariffs on Chinese imports that could come into effect on Friday, throwing global markets into disarray. His administration doubled down on that threat Monday evening. Investors previously expected Beijing and Washington to be close to sorting out a trade deal after months of negotiations. A lack of an agreement between the world's two largest economies could stymie global growth.

Speaking to reporters on Monday, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said China reneged on previous agreements over the weekend, undermining progress towards a detailed trade agreement between the world's two largest economies. Lighthizer, the top US trade negotiator, said the administration would increase penalties on $200 billion of Chinese goods to 25% from 10% on Friday. Trump renewed his threat to raise tariffs on Sunday.

China isn't the only place with which Trump wants to change trade relations. The United States has other trade-related issues on its plate: The European auto industry is also on his list and could get hit with tariffs. The US-driven replacement for NAFTA, called USMCA, took more than a year to negotiate but is not yet ratified. In short, uncertainty is back.

Blue chips fell across the board. China Mobile (00941) dipped 1.1% to HK$72.65. AIA (01299) shed 1.7% to HK$80.4. HSBC (00005) dipped 1.8% to HK$67.45. HKEX (00388) slipped 1.6% to HK$261 after it reported 1Q earnings growth of 2% year-on-year increase in first-quarter profit to HK$2.6 billion. Chinese social media and gaming giant Tencent Holdings gained 1.1% to HK$384.8, after it announced a public test of its own Game for Peace, a smartphone game similar to PlayerUnknown's Battlegrounds.

Exporters were hurt by US president Trump's potential tariff hike on China's imports to the country. Techtronic Industries (00669) sank 4.4% to HK$53.45. Shenzhou International (02313) declined by 2.6% to HK$101.3. Minth Group (00425) dropped 3% to HK$24.35. Pacific Textiles (01382) retreated 3.3% to HK$6.83. Fuyao Glass Industry (03606) fell 3.4% to HK$25.7.

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