China Stocks Drift Lower Amid Lackluster Trading and Rising Trade Frictions with the EU

Li Chen
18 Jun, 2024
Hong Kong

Market sentiment was weak in Shanghai and Hong Kong trading amid rising trade tensions between China and the European Union. 

The CSI 300 index and the Hang Seng index lacked direction in early afternoon trading after China retaliated with an anti-dumping investigation on pork imports from Europe. 

The move comes after the European Union placed an additional tariff of up to 38% on electric vehicle imports from China following a seven-month investigation. 

Investors were on the defensive a day after China's statistics bureau reported a flood of mixed economic data, indicating a revival in consumer spending overshadowed by the deepening malaise in the property sector. 

Moreover, the People's Bank of China held its one-year medium-term lending rate at 2.5%, dashing hopes of some investors looking for a rate cut to revive property transactions. 

China's property sector is battling on two fronts: buyers are holding back amid falling prices, and property developers are struggling amid heavy debt loads and overbuilding. 

China's property prices are falling at a rapid pace in the second- and third-tier cities, but prices are still elevated in the top-tier cities like Beijing and Shanghai, raising affordability issues for first-time home buyers. 

 

China Stock Movers 

The CSI 300 index increased 0.3% to 3,545.64, and the Hang Seng index fell 0.2% to 17,903.06. 

BYD decreased 0.1% to HK$233.20, and Warren Buffett-controlled Berkshire Hathaway lowered its stake in the electric vehicle maker to 6.9% from 7.0%. ahead of the European Union tariffs. 

Li Auto declined 3.7% to HK$71.15, and Geely Automobile fell 0.1% to HK$8.86. 

Zijin Mining Group declined 2.5% to HK$15.90 after the company announced its plan to sell convertible bond debt and stocks to raise $2.5 billion. 

Wuhan Youji Holdings soared more than 78% to HK$9.85 after the maker of toluene derivative products used in oil refining and paints priced its initial public offering at HK$5.50 per share.