The escalating trade war between the US and China has left Hong Kong asset managers wondering about the impact on the Chinese economy and stock market.
Last week, US President Donald Trump announced wide-ranging tariffs on US imports, including a 34% levy on goods from China. Beijing retaliated with an identical tariff on US imports.
Trump responded on April 8 with another 50% tariff on Chinese imports, driving the rate up to a whopping 125%.
The US tariffs have left global stock markets bleeding. In Hong Kong, the benchmark Hang Seng Index kicked off this week by nosediving 13%, while China’s CSI 300 Index tumbled 7.1%.
Wang Yi, head of quantitative investment at Hong Kong’s CSOP Asset Management, says investors are worried about the tit-for-tat levies and wonder how Washington and Beijing will negotiate trade policies.
“The ultimate goal of Trump is uncertain. No one really knows what he wants and the priority on his wish list,” he tells Asia Asset Management.
According to Wang, no economy or asset class can escape unscathed from the impact of the wide-ranging US tariffs, which many fear may trigger a recession in the US.
Kelly Chung, chief investment officer of Hong Kong investment firm Value Partners, pointed out that China is now less dependent on trade with the US.
“China has diversified its exports to other countries, making it more strategically prepared for such challenges,” she says. “Additionally, China has the capacity to implement more pro-growth policies to counteract the negative effects of tariffs if necessary.”
Meanwhile, in Taiwan, the government of President Lai Ching-te has no plans to retaliate against the 32% US tariff on Taiwanese semiconductors and other imports announced last week.
According to Jeff Chang, chairman of Taiwan’s Cathay Securities Investment Trust, chip companies can pass on the cost to US clients such as Apple Inc.
He downplayed the impact on Taiwan’s stock market.
“The demand for artificial intelligence products is taking off. Taiwan is a key player in the supply chain, demonstrating strong fundamentals and exceptional competitive strength,” he says.
