China Markets Remain Under Pressure Ahead of the Third Plenum Next Week

Li Chen
05 Jul, 2024
Mumbai

Market sentiment was weak in Shanghai and Hong Kong after the European Union imposed additional tariffs on Chinese electric vehicles starting Friday. 

The Hang Seng index and the CSI 300 index declined 1% after the European Union imposed additional tariffs between 20.8% and 37.6% on Chinese electric vehicles sold in the region. 

The additional tariffs, on top of the 10% current duty, are expected to be in place for four months. 

Market sentiment remained subdued as investors looked ahead to additional economic and financial market-supportive measures at the end of the Communist Party's Third Plenum. 

Expectations are high that policymakers may announce deeper economic reforms to revive the faltering property market and bolster consumer confidence. 

However, Chinese policymakers are struggling to devise broad reforms amid falling foreign investments, rising capital outflows, weak consumer sentiment, and record high youth unemployment. 

Investors are looking ahead to the start of earnings season next week, and technology and export-heavy industrial companies are likely to meet or exceed earnings expectations. 

In international trading, the pound and the euro traded lower as investors worried that new governments in France and the U.K. are likely to step up government spending amid record-high national debts. 

The UK's Prime Minister, Rishi Sunak, conceded defeat after the Labour Party won 406 seats in the House of Commons, with 650 seats. 

The sharp reversal in voter sentiment came about after a series of recent policy missteps over immigration, healthcare funding, and lack of infrastructure spending during the Conservative government of 14 years. 

 

China Stock Movers 

The Hang Seng Index declined 1% to 17,851.36, and the CSI 300 index dropped 0.97% to 3,412.25. 

Electric vehicle markets dropped after the European Union's additional tariffs kicked in. 

Li Auto declined 2.2% to HK $78.95, BYD fell 0.3% to HK $229.50, Xpeng dropped 3.5% to HK $30.20, and Nio eased 1.5% to HK $37.05. 

Shandong Jianbang New Material soared 130% from its initial public offering price of 44.63 yuan on the first day of its trading in Shanghai.