Hong Kong’s equity markets suffered their steepest decline in nearly two months on Monday, driven by renewed geopolitical friction between the United States and China and underwhelming property sector data. The downturn highlights mounting investor unease over the fragile state of global trade relations and domestic economic headwinds.
The Hang Seng Index dropped 2.2 per cent to 22,778.45 by the midday trading break, marking its largest single-session loss since 7 April. The Hang Seng Tech Index also declined by 2.4 per cent. Mainland Chinese markets remained closed for the Dragon Boat Festival and are scheduled to resume trading on Tuesday.
Market breadth was broadly negative, with 78 of the Hang Seng’s 83 constituents recording losses. Notably, electric vehicle manufacturers led the retreat: Li Auto fell 4.2 per cent to HK$107.60, while BYD declined 3.2 per cent to HK$380.20. Kuaishou Technology, a leading short-video platform, dropped 3.7 per cent to HK$51.35, and Anta Sports Products fell 3.5 per cent to HK$92.15.
Conversely, casino operators defied the broader market trend. Sands China gained 1.2 per cent to HK$15.60, and Galaxy Entertainment Group rose 0.8 per cent to HK$33.65. Their uptick came after gaming revenue in Macau climbed 5 per cent year-on-year in May, reaching its highest level since January 2020.
The sell-off followed comments from former US President Donald Trump, who accused China of breaching a significant portion of the trade tariff agreement, although he provided no specifics. Market sentiment was further dampened by Washington’s escalating measures targeting China, including export controls on AI-related chips and proposed visa restrictions for Chinese students.
Beijing responded on Monday, accusing the US of violating prior commitments made during Geneva talks. “If the US insists on acting unilaterally and continues to harm China’s interests, China will resolutely take strong measures to safeguard its legitimate rights,” a spokesperson from China’s Ministry of Commerce stated.
Analysts at Nomura, including Jing Wang, noted that the recent escalation could cast a shadow over trade discussions during the current 90-day truce period. They also warned that the ongoing strategic decoupling between the two nations appears to be accelerating.
In the property sector, new figures showed that sales among China’s top 100 developers rose 3.5 per cent month-on-month in May, according to data from China Real Estate Information Corporation. Despite the uptick, the performance fell short of expectations, particularly given that May is typically a strong month for property transactions.
Elsewhere across the Asia-Pacific region, Japan’s Nikkei 225 declined 1.6 per cent, while South Korea’s Kospi and Australia’s S&P/ASX 200 each registered losses of 0.3 per cent.
-South China Morning Post
