Asian Markets Down Despite Trump’s Offer on Tariff Breaks

In Asian markets today, Hong Kong’s stock market witnessed a sharp downturn on Tuesday, marking a three-week low as the Hang Seng Index tumbled 2.4% to 23,344.25. This decline was driven by widespread profit-taking among investors who remained cautious due to the absence of strong market catalysts. The Hang Seng Tech Index experienced an even steeper drop, plunging 3.8%, with all its constituent stocks finishing in the red. Mainland markets showed more resilience, with the CSI 300 Index and the Shanghai Composite Index both edging down by 0.1%.

The decline occurred despite strong overnight gains on Wall Street, triggered by a statement from U.S. President Donald Trump about his administration’s willingness to offer tariff breaks to various countries. However, this optimism failed to spill over into Hong Kong’s markets as investors opted to secure their profits amid heightened volatility.

Technology and electric vehicle (EV) firms bore the brunt of the sell-off, with BYD Electronic International leading the losses, falling 9.6%. Its parent company, BYD, declined by 3.5% despite reporting impressive financial results, including a record 73% increase in fourth-quarter profit and full-year revenue surpassing Tesla for the first time. BYD’s 2024 revenue grew 29% to reach 777 billion yuan (US$101.1 billion).

Other major players in the EV and tech sectors also faced declines. Xiaomi’s stock dropped 6.3% following a US$5.5 billion share sale to fund its expansion into the car manufacturing business. Xpeng, Geely Auto, and Li Auto recorded losses of 7.5%, 5.6%, and 4.9%, respectively, as investor sentiment shifted to locking in gains amid market uncertainty.

Analyst View on Asian Markets Optimistic

Analysts attributed the downturn in Asian Markets to cautious profit-taking as expectations of continued volatility loomed large. Some experts, like Zhou Ling of Shanghai Shiva Investment, observed that the recent rally in Chinese technology stocks had already delivered substantial returns to investors, prompting many to exit positions. Similarly, Ivan Li of Loyal Wealth Management noted that market participants were prioritizing short-term gains over long-term bets.

Despite the broader market decline, strong earnings from key firms such as BYD could soon attract fresh capital to both Hong Kong and mainland stock markets. Many investors remain optimistic about the long-term profitability of tech and EV companies, which are seen as crucial drivers of economic growth in the region.

Elsewhere in the Asia-Pacific region, asian markets painted a mixed picture. Japan’s Nikkei edged up 0.5%, and Australia’s S&P/ASX 200 gained 0.1%, while South Korea’s Kospi dipped by 0.6%. Meanwhile, two companies made their market debuts: Nanshan Aluminium International Holdings lost 5.1% in Hong Kong, whereas Wintech-Nano Suzhou surged by 202.4% in Shanghai.

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