HSI Slumps 2.9%, Shanghai In Worst Fall Since 2016

Hong Kong stocks plunged almost 3 percent on Monday after Donald Trump threatened to hike tariffs on hundreds of billions of dollars worth of Chinese goods at the end of the week.

The Hang Seng Index ended the day 2.9 percent down, to 29,209.

Shanghai stocks suffered their worst day in more than three years. after Trump's tweet and reports that Beijing may cancel talks spooked mainland investors.

The benchmark Shanghai Composite Index sank 5.6 percent, to 2,906, while the Shenzhen Composite Index plummeted 7.4 percent, to 1,515.

Shanghai's decline was the worst in a single day since February 2016.

The mainland losses were the biggest in an Asia-wide sell-off triggered by Trump's tweeted announcement that tariffs on US$200 billion of imports from China would rise on Friday, an apparent bid to pressure Beijing to reach a deal on their trade disputes.

It casts a shadow over the next round of talks set for Washington this week, but while Bloomberg News and the Wall Street Journal reported Beijing was considering delaying the meeting, an official said negotiators were still planning to attend.

The yuan also suffered, losing 1.3 percent at one point – its heaviest drop for three years – before recovering somewhat in the afternoon to 6.7976 to the US dollar, down 0.92 percent.

Trump stoked "risk aversion and panic emotions" in markets, said Qian Qimin, an analyst with Shenwan Hongyuan Securities in Shanghai.

Qian said Chinese shares could fall further in coming days but "should stabilise soon".

"The additional tariffs, if imposed, may not have much impact in the short term since the government can use policies to offset this," he said.

Securities shares were among the biggest losers. Citic Securities and First Capital Securities both dropped by the maximum allowable 10 percent to close at 20.74 yuan and 6.34 yuan, respectively.

Among other companies, telecoms operator China Unicom plummeted 9.15 percent to 6.06 yuan and telecoms manufacturer ZTE fell the maximum 10 percent to 28.94 yuan.

Liquor giant Kweichow Moutai lost 6.98 percent to end at 906.00 yuan and Yanghe Brewery finished 7.44 percent lower on 108.91 yuan.

Individual retail traders, who drive much of the trading volume on Chinese exchanges, anxiously watched a price board at a Shanghai brokerage on Monday, with some venting over Trump's comments.

"I expected the market would fall but not by so much," said a 77-year-old retiree who gave only her surname, Wang.

"I'm very annoyed. I've lost at least 5 percent. I have no choice but to pray for new measures from the government today."

Among Hong Kong stocks ZTE dived 8.82 percent to HK$23.25, while market heavyweight Tencent shed 3.15 percent to HK$375.60 and AAC Technologies plunged 6.13 percent to HK$49.75.

HSBC fell 2.30 percent to HK$68.10, Sino Land dropped 2.75 percent to HK$13.46 and casino operator Wynn Macau retreated 5.10 percent to HK$21.40.

Energy firm Sinopec was 1.84 percent off at HK$5.88, in line with a sell-off on oil markets, while insurance giant AIA gave up 3.59 percent to HK$80.45. (AFP)