Hang Seng Index Extended Losses to Fourth Consecutive Session; China Manufacturing Shifts, Shrinks, and Elongates Amid Tariff Wars

Li Chen
12 Mar, 2025
Hong Kong

Market indexes in China and Hong Kong weakened, reflecting declines in global markets amid escalating tariff tensions and uncertain geopolitical outlook. 

The Hang Seng index dropped 1.6%, and the CSI 300 index declined 0.4% amid worries that higher U.S. tariffs on Chinese shipments may alter the manufacturing landscape and slow down economic growth in China. 

Manufacturing businesses have struggled to adjust to new U.S. trade policy, the emergence of online platforms, and falling operating margins. 

Small manufacturing companies making consumer goods, basic electrical and electronic goods, and apparel are forced to shut operations or consolidate.

Medium enterprises are looking to shift their operations to Vietnam, Mexico, or Indonesia, and large enterprises are investing billions of dollars setting up operations in Mexico, Brazil, and Eastern European countries.

Supply chains are rapidly evolving, and businesses are adjusting to new U.S. tariff threats, and despite the threats of higher trade barriers, Chinese companies are retaining market share. 

The latest market decline was precipitated by the Trump administration's slapping of additional tariffs of 25% on steel and aluminum products from Canada. 

Over the last six weeks, the Trump administration has managed to roil global markets, disrupt international goods trade, and announce government staff layoffs. 

The reckless moves by the administration have unnerved investors, and the U.S. stock markets have lost about $4 trillion in valuation, and the tech-heavy Nasdaq has entered correction territory. 

 

China Indexes and Stocks 

The Hang Seng Index declined 1.6% to 23,428.53, and the mainland-focused decreased 0.4% to 3,923.63. 

Cathay Pacific Group decreased 1.6% to HK $10.94 after the international air carrier announced its second consecutive annual profit in 2024.

The company said revenue increased 10.5% to HK $104.4 billion from HK $94.5 billion, net income rose 1% to HK $9.9 billion from HK $9.8 billion, and diluted earnings per share jumped 6% to 133.2 cents from 125.8 cents a year ago.

The company plans to propose a second interim dividend of 49 cents, taking the full-year dividend to 69 cents, an increase of 61% to 69 cents from 43 cents a year ago. 

The company returned to profitability in 2023 after losing HK$34 billion in the previous three years after the Covid-19 pandemic disrupted world travel and halted most international flights.

Cathay Pacific and HK Express, he group’s airlines, transported more than 28 million passengers in 2024, up from over 20 million in the previous year.