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China and Hong Kong stocks down on China tariffs fear

Monitoring Desk

BEIJING: China and Hong Kong stocks both retreated on Thursday, as investors awaited the White House’s decision on whether to slap an additional US$200 billion of tariffs on imports from the Asian nation.

The Shanghai Composite Index fell 0.5 per cent at the close and Hong Kong’s Hang Seng Index shed 1 per cent. Trading was light as traders stayed on the sidelines, keeping a close watch on the latest development on the trade war between the world’s two largest economies. The daily trading volumes on the Shanghai bourse were about a fifth below the 30-day average and those in Hong Kong were 2.6 per cent lower, according to Bloomberg data.

Thursday was the last day for the American public to provide feedback on the US$200 billion tariffs the Trump administration has proposed on Chinese imports. Data seems to be adding pressure on Washington to follow through the proposal as the US’ trade deficit with China widened to a record US$36.8 billion in July and its overall gap with the rest of the world increased to US$50.1 billion, according to the latest data from the Commerce Department.

The US has already levied US$50 billion tariffs on Chinese goods, with China retaliating with similar measures.

“Everyone in the market is waiting for the result and no one would make big money action before that comes,” said Wu Kan, a fund manager at Shanshan Finance in Shanghai. “When the window period has passed, and whether the tariffs take effect or not, a hanging sword will be removed from the market to give investors a respite.”

The day’s decline put the Shanghai Composite less than 1 per cent shy of a 31-month low that was seen in August, while the Hang Seng Index remained 1.7 per cent away from entering a bear market.

The Shanghai Composite dropped 12.75 points to 2,691.59 on Thursday. The CSI 300 Index of larger companies slid 1.1 per cent and the ChiNext gauge of small-caps slipped 0.5 per cent.

Consumer and technology companies led the pack of decliners. Jiangsu Yanghe Brewery Joint-Stock slumped 5 per cent to 109.20 yuan and dairy maker Inner Mongolia Yili Industrial Group retreated 4.3 per cent to 22.40 yuan. Hangzhou Hikvision Digital Technology, China’s biggest maker of surveillance camera equipment, lost 3 per cent to 31.30 yuan.

Natural gas suppliers and a drilling equipment maker rallied after the State Council issued guidelines to promote the development of the clean energy late Wednesday. The nation aims to boost the output of natural gas to more than 200 billion cubic metres by 2020.

Guizhou Gas Group jumped by the 10 per cent daily limit to 20.01 yuan and China Oil HBP Science & Technology, an exploring equipment maker, also surged by that magnitude to 3.36 yuan.

In Hong Kong trading, the Hang Seng Index sank 269.03 points to 26,974.82. The Hang Seng China Enterprises Index, or the H-share gauge, dropped 0.6 per cent.

Tencent Holdings, the biggest weighting on the benchmark, slid 3.1 per cent to HK$314.60, the lowest close since August 11, 2017. Morgan Stanley cut its 12-month price target of the stock for a second time in less than a month, citing the uncertain outlook of its gaming business amid regulatory headwinds.

The Chinese internet juggernaut was also hit by the spill over effects from e-commerce retailer JD.com, whose stocks have tumbled over the past few days in US trading after founder Richard Liu Qiangdong was arrested on suspicion of rape, but later released. Tencent is JD’s biggest shareholder with an 18 per cent stake.

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