Chinese Stocks Decline on Trade Tensions, Parcel Suspension
Chinese stocks witnessed a decline as investors reacted to escalating trade tensions upon their return from the Lunar New Year holiday.
The CSI 300 Index erased early gains to fall 0.6% within minutes on Wednesday, its first trading session after the holiday. The Hang Seng China Enterprises Index slumped over 2% after a 3.5% surge in the previous session, with e-commerce companies leading the losses.
Volatility emerged following a report that the US Postal Service was suspending inbound parcels from China and Hong Kong. This move came a day after tariffs were imposed by both Washington and Beijing on each other's exports.
Despite hopes for a potential deal to ease tensions, investors are exercising caution due to ongoing uncertainty. The equity outlook remains unpredictable, dependent on tariff developments and China's economic recovery.
The CSI sub-gauge for info tech stocks performed well, briefly climbing over 3%. Tech companies perceived to benefit from DeepSeek's affordable artificial intelligence model fueled the gains.
On the currency front, China bolstered its support for the yuan, setting its daily reference rate stronger than 7.2 per dollar, mitigating depreciation pressure from trade tensions. The onshore yuan depreciated 0.4% after resuming trading post-holiday.
"Tariff increases are likely, while milder starting tariffs could delay major stimulus measures," noted Xin-Yao Ng from abrdn Plc.