U.S. Trade Policy Uncertainty Weighed On Market Sentiment In China and Hong Kong

Li Chen
06 Feb, 2025
Hong Kong

Stock market indexes in China and Hong Kong rebounded, and investors remained cautious amid U.S. trade policy uncertainty.

The Hang Seng index increased 0.5%, and the CSI 300 index advanced 0.8%, and investors pinned their hopes that trade tensions between the U.S. and China will ease in the months ahead. 

Despite the loud rhetoric from the Trump administration and an increase in U.S. tariffs, China's exports have continued to rise over the last eight years, including in the first 4-year term of Donald Trump. 

However, markets are bracing for heightened volatility amid policy reversal and chaotic U.S. presidential administration. 

The U.S. Postal Service reversed its plans to halt processing goods shipped from China and Hong Kong only hours after implementing it. 

The move will avoid duty on Chinese goods worth less than $800 under the "de Minimus" rule, which will continue the flow of cheap goods sourced from online markets operated by Chinese e-commerce companies.

About $245 billion worth of Chinese goods are shipped annually to the U.S., and about 3 million packages arrive daily to the U.S. from China and Hong Kong.

Despite the removal of the temporary block on processing inbound shipments from China, tensions remained high, and investors are bracing for additional trade barriers for Chinese goods shipped via Mexico, Vietnam, and other third countries. 

 

China Indexes and Stock Movers 

The Hang Seng index advanced 0.5% to 20,700.30, and the CSI 300 index gained 0.8% to 3,825.81.

E-commerce companies were in focus after the U.S. Postal Service made a U-turn on processing inbound shipments from China and Hong Kong. 

Alibaba Group increased 0.2% to $97.75, Meituan decreased 0.2% to HK $149.20, JD.com added 0.3% to HK $157.0, and Tencent Holdings declined 0.3% to HK $416.80.

China Literature Ltd increased 8.1% to HK $29.15, and the Tencent-backed e-book seller extended this year's gains to 19%. 

Semiconductor stocks advanced in the hopes that Chinese companies will find a way around the U.S. sanctions to continue to improve their production capabilities.

Hua Hong Semiconductor advanced 5.2% to HK $26.55, and SMIC advanced 5.5% to HK $47.25.