Chinese Stocks Face Renewed Pressure Amidst US Tariffs



Hong Kong, China - Chinese stocks listed in Hong Kong are poised for renewed pressure as trading resumes on Monday following a three-day holiday, in the wake of US President Donald Trump's latest salvo in the ongoing trade war.

Key Points:

- Fears of rising tariffs have already driven the MSCI China Index into a bear market last month.
- Trump has ordered general tariffs of 25% on Canada and Mexico and 10% on China, effective Tuesday.
- China has vowed countermeasures and plans to file a complaint with the World Trade Organization.
- The new tariffs could curtail China's exports, further straining its economy.
- Online retailers like Alibaba and the chip industry are particularly vulnerable.

Sectors and Stocks Impacted:

Online Retailers:

- Trump's tariffs target e-commerce, eliminating a long-standing exemption for packages under $800.
- This move hurts online retailers like Alibaba, as shipments from China will now incur tariffs.
- The US processes 30% of all de-minimis shipments from China, primarily consisting of goods like clothing and electronics.

Chips:

- Semiconductor makers selling to China, such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., are under scrutiny.
- Trump has threatened to impose tariffs on chips, while China seeks self-sufficiency in the industry.
- Escalating tensions between the US and China over technology could worsen the situation.

Mexico Exposure:

- Asian auto stocks with exposure to Mexico, like HL Mando Co. and Kia Corp., are on investors' radar.
- Mexico's president has announced retaliatory measures, including tariffs and non-tariff barriers.
- BYD Co., planning to build a Mexican manufacturing plant, is also in focus.

Green Energy:

- Stocks related to green energy, such as electric vehicle battery manufacturers and solar companies, remain vulnerable.
- Trump prioritizes fossil fuels and has reduced focus on environmental issues.
- US scrutiny of Chinese solar companies adds to their challenges.

Market Impact:

- The Nasdaq Golden Dragon Index fell 3.5% on Friday, marking its worst day in seven weeks.
- The offshore yuan slid 0.5% on Monday, approaching a record low against the dollar.
- The impact of the trade war is expected to continue as Trump threatens further tariffs on a wide range of imports.