Chinese stocks slipped as investors responded to heightened trade tensions upon their return from a week-long holiday.The CSI 300 Index erased opening gains of
0.7% within minutes on Wednesday, its first trading session after the Lunar New Year holiday, to fall 0.3%. The Hang Seng China Enterprises Index slumped more than 1% following a 3.5% jump in the previous session.
The market moves suggest caution prevails among mainland traders as Washington and Beijing exchange tariff volleys. While hopes remain for an eventual deal that can defuse tensions, investors are reducing risk as uncertainty remains high.
US President Donald Trump said there’s no rush to talk to Chinese leader Xi Jinping, adding that he’ll speak at an appropriate time.
The outlook for equities remains uncertain, hinging on further tariff developments as well as China’s economic recovery. Manufacturing activity unexpectedly slowed for a second straight month in January, a private survey showed, while residential home sales resumed falling last month.
See also: China’s inflation declines below zero for first time in year
There are signs that consumption may be on the mend as the country saw a record US$1.3 billion in box office receipts over the Lunar New Year holiday period.
“Trade relations between the US and China remain a risk, though if the 10% US tariff and China’s response measures were to be postponed, it will good for the market,” said Kenny Wen, head of investment strategy at KGI Asia. “On the other hand, the disputes may escalate again.”
Chart: Bloomberg
