China Indexes Erase Monday's Gains After Tariff Uncertainty Weighed

Li Chen
13 May, 2025
Hong Kong

A day after boosting market indexes by 3%, investors took a cautious view of the US-China trade agreement a day after its announcement. 

The Hang Seng index fell more than 1.5%, and the mainland-focused CSI 300 index struggled to stay above the flatline as investors reassessed the recently announced temporary pause in sky-high tariffs. 

Despite  the Monday's market enthusiasm, investors turned cautious and worried about the near-term impact and market uncertainties. 

Moreover, investor enthusiasm faded after the forceful language in the joint statement lowered the possibilities of additional stimulus measures from Beijing's policymakers. 

China and the U.S. agreed to pause sharply higher tariffs announced, but never implemented, since April 2, according to a joint statement released by both sides on Monday. 

The U.S. will keep the additional 10% base tariffs and 20% fentanyl tariffs on select goods, and China will retain 10% base tariffs on all U.S. imports and between 10% and 15% additional tariffs on agriculture and mineral products and certain machinery. 

The de-escalation of trade tensions between China and the US calmed market anxieties, raising hopes that a broader and longer-term agreement could be drafted before the ending of the 90-day pause.  

Essentially, the U.S. president backed down from his aggressive stance without getting in return substantial concessions, and tariff levels are now set at the level announced on March 4.  

Meanwhile, China ramped up its efforts to diversify sources for agriculture and seafood products and expand sourcing to South and Central America. 

 

China Indexes and Stocks 

The Hang Seng index declined 1.7% to 23,150.25, and the mainland-focused CSI 300 index inched up 0.02% to 3,891.63. 

Investors turned cautious ahead of the release of earnings results this week from Alibaba Group, Tencent Holdings, NetEase, and Meituan, accounting for about 25% of the market capitalization of the Hang Seng Index.  

Alibaba Group Holding declined 3.8% to HK $126.20, Tencent Holdings decreased 2% to HK $507.0, NetEase plunged 2.5% to HK $164.70, and Meituan fell 4% to $138.70. 

BYD dropped 3.2% to HK $402.20, and BYD Electronic International declined 5.2% to HK $35.75.