Hong Kong share market closed down on Wednesday, 29 May 2019, on fears of further escalation in the US-China trade war after reports that China is prepared to cut off supplies of rare-earth metals and its implications for the global economy. At closing bell, the Hang Seng Index declined 0.57%, or 155.10 points, to 27,235.71. The Hang Seng China Enterprises Index was down 0.25%, or 26.10 points, to 10,390.45.
Stalled talks in the U. S.-China trade war have soured sentiment for risk assets, with the global economy already showing signs of fragility before the full impact of the most recent tariff hikes kicks in. Investors remained cautious, awaiting new developments between Beijing and Washington amid the ongoing trade tensions.
U. S. President Donald Trump said on Monday he was not yet ready to make a deal with Beijing, alleging that "businesses are leaving China, by the hundreds, by the thousands, and going into areas that are not tariffed." Hitting back, a Chinese Communist Party newspaper warned the United States on Wednesday the government was ready to use rare earths to strike back on trade, saying in an extremely strongly worded commentary "don't say we didn't warn you
Beijing is gearing up to use its dominance of rare earths as a counter in its trade battle with Washington, according to in China that included hints from the state planning agency. A report in Chinese state media that suggested Beijing would restrict exports of rare earth, using the minerals as leverage in the trade dispute, also fanned anxiety. Rare earth is a key component in devices ranging from smartphones and cameras to televisions and any move to restrict their supply would have a devastating impact on manufacturers, with China producing more than 95% of the commodities.
Chinese shipments accounted for 80% of all U.
S. imports of rare-earth minerals between 2014 and 2017, according to reports, suggesting that U. S. markets could be in for a major blow if the government carries out plans to restrict business to the U. S. President Trump indicated this week that negotiators are no closer to a deal with China's government over a variety of trade issues, while the Treasury Department is reportedly considering $300 billion in further tariffs targeting imports from China. The Trump administration has accused Chinese negotiators of walking back provisions the two sides had previously agreed upon, an accusation that has stalled the bilateral talks.
Among HK blue chips, HSBC (00005) edged down 0.917% to HK$64.85. Tencent (00700) fell 1.1% to HK$322. HKEX (00388) increased 0.3% to HK$255.4. CCB (00939) dropped 0.6% to HK$6.15. China Mobile (00941) decreased 0.6% to HK$70.05
Powered by Capital Market - Live News
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)