The Republican pledges to impose 45% tariff on Chinese exported goods
China and Hong Kong stocks experienced a significant surge on Wednesday at the back of Wall Street’s record run and speculations which suggest the US will most likely withdraw from the Asia Pacific trade area. To be more specific, this allows China and Hong Kong to play a major role in the region. The news has ignited excitement among the investors as many experienced the price of their shares to hike.
Several reports suggests that the newly elected US President, Donald Trump, plans to draw out from the Trans-Pacific Partnership (TPP). However, the news proves to be very fruitful for China and Hong Kong stock market. Adding to that, China’s blue-chip index increased by 0.5% to 3,485.59 on Wednesday, while Shanghai Composite Index surge by 0.2% to 3,255.84 points. Also, it is worth noting that both indexes touched their highest level on Wednesday since the start of this fiscal year, and are currently experiencing an upward trend.
Subsequently, Hang Seng shares index also experience surge of 0.4% to 22,763.52 points. On the other hand, Hong Kong China Enterprises Index increase by 0.9% to 9,735.71 points. Adding to that, almost all the sectors in Hong Kong experienced a surge, with industrial and material leading the gains. To give you an example, HSBC mentioned in its recent strategy report that it will continues to “have a relative preference for the Hong Kong market”, due to its attractive valuation.
For the unfamiliar, the Trans Pacific Partnership (TPP) was signed between dozens of nations across the globe last year generates approximately 40% of the world’s economy. However, Mr. Trump believes that it’s a potential disaster for the country.” He further said that he would instead “negotiate fair bilateral trade deals that bring jobs and industry onto American shores.”
Interestingly enough, it was recently reported that China’s Evergrande Group purchased another 551.96 million Shenzhen-traded Vanke shares in last few months, which resulted in the China’s property to increase over 2%. Adding to that, the purchase of 551.96 million shares depicts that the property stocks that are modestly priced are still worth investing, regardless of Beijing’s home purchase restriction.
Many other equity markets in the Asian Pacific region took part in the day’s upbeat trading. For instance, South Korea’s KOSPI composite index closed at almost 0.9% higher, while India’s Sensex increased by 0.6% and Taiwan’s Taiex weighted index advanced by 1%.
The new trade policies under Donald Trump will enable China to supplant the United States as a major market as many developing economies in Asia prefer free trade rather than less. In any case, the question remain over how far Donald Trump’s protectionism policies goes, with the Republican pledges to impose 45% tariffs on the Chinese exported goods. It seems like a start of the trade war between the two biggest economies of the globe.