China Markets Attempt to Rebound, EU Imposes Additional Tariffs On Chinese Electric Vehicles

Li Chen
13 Jun, 2024
Hong Kong

Benchmark indexes in Shanghai and Hong Kong rebounded amid hopes of additional market-supportive measures from the Chinese government. 

The CSI 300 and the Hang Seng index inched higher from the one-month level reached in Wednesday's trading as investors pinned their hopes on new market-supportive measures from the People's Bank of China and local Chinese governments. 

The three-monthlong market rally peaked in late May, and the benchmark indexes have lost as much as 9% in the last three weeks of trading. 

However, market sentiment recovered on the hopes that weakening inflation in the U.S. may support the case for at least one rate cut before the year's end. 

Moreover, the Hong Kong Monetary Authority held its key lending rate unchanged at 5.75%, reflecting the U.S. Federal Reserve's decision to hold its target rate range steady. 

The Hong Kong dollar is linked to the U.S. dollar, and the city's monetary authority revises rates following the rate announcements by the U.S. Federal Reserve to maintain the local currency's peg with the U.S. dollar. 

 

China Stock Movers 

The CSI 300 index declined 0.4% to 3,528.92, and the Hang Seng index rose 0.5% to 18,034.42. 

Electric vehicle makers advanced after the European Union's size of tariffs was deemed not restrictive enough for most Chinese vehicle makers. 

The European Union imposed between 17.4% and 38% tariffs on electric vehicles imported from China, according to a statement released by the European Commission. 

Companies participating in the seven-month EU probe faced a lower tariff rate, as tariffs imposed on Geely were 20% and on BYD 17.4%, but SAIC, which did not participate in the EU's subsidy probe, faced 38.1% import duties. 

The new tariffs will be in addition to the existing duty of 10%, effective July 4. 

Including the latest tariffs, Chinese vehicle makers will lose their price advantage but are likely to compete on design and advanced features, but makers may suffer from poor reliability and shoddy engineering practices. 

Geely Automobile Holdings, the largest vehicle exporter to the European Union, is likely to face fewer-than-expected hurdles in exporting cars to the region. 

Li Auto jumped 2.2% to HK$74.55, and BYD surged 6.5% to HK$234.20. 

QuantumPharm, a drug researcher using artificial intelligence technology, advanced more than 10% from its initial public offering price of HK$5.28 on the first day of trading in Hong Kong.