An investor’s phone shows information on falling A-shares on Monday in Fuyang, Anhui Province.
VCG/VCG via Getty Images
Chinese stocks plunged steeply on Monday as a tit-for-tat tariff war with the U.S. builds, and the country’s richest tycoons lost tens of billions of dollars in a day.
After initially demonstrating resilience to the Trump administration’s tariff increases, the country’s stock markets fell off a cliff as investors returned from an extended holiday weekend. The CSI 300 index tracking stocks listed in Shanghai and Shenzhen dropped as much as 7.5% in trading Monday morning while Hong Kong’s Hang Seng Index plummeted as much as 10.5%.
The market mayhem came after China retaliated on Friday by imposing a matching 34% duty on all U.S. imports starting April 10. Beijing’s countermeasures also include restricting the export of certain rare-earth metals. The retaliation, which came on a public holiday, stood in contrast with delayed responses to Trump’s previous tariffs, according to an April 5 Nomura research note.
As the world’s two largest economies showed little interest in engaging in negotiations in the near-term, investors chose to sell, Shen Meng, a Beijing-based managing director of boutique investment bank Chanson & Co., says by WeChat.
That caused bellwether stocks including Hong Kong-listed Tencent to plunge almost 10% as of 11:30 a.m. Monday, wiping $4.5 billion from the wealth of Chairman Ma Huateng, who was still China’s third richest billionaire with a net worth of $48 billion, according to Forbes’ Real-Time Billionaires List. Other big wealth losses include a $4.2 billion drop from the net worth of Xiaomi founder Lei Jun and a $2.5 billion plunge in the fortune of BYD cofounder Wang Chuanfu.
Early Monday, Chinese moguls accounted for four out of the five biggest losers on the Real-Time Billionaires List. In addition, Japan’s Masayoshi Son’s net worth dropped by $2.1 billion to $23.6 billion as Softbank’s Tokyo-listed shares fell over 10% amid plunges in Japan’s stock markets.
When the India markets opened later, Reliance Industries’s Chairman Mukesh Ambani’s wealth dropped $5.4 billion to $85.9 billion and Adani Group Chairman Gautam Adani saw his fortune plunge $4.1 billion to $56.2 billion. They are India’s richest and second-richest billionaires.
Chinese authorities are vowing to support the domestic economy. The market bloodbath may end in a few days as policy measures are announced, says Chanson & Co’s Shen.
In an editorial published late Sunday, an unnamed commentator in the government-run People’s Daily wrote that China has room to expand its fiscal deficit and reduce interest rates and banks’ reserve requirements. The article also said that China will use “extraordinary” measures to boost domestic consumption and accelerate the implementation of announced policies, although it didn’t go into details.
Xin-Yao Ng, Singapore-based investment director of Asian equities at Aberdeen, says by email that China is perhaps “one of the best prepared” because it has been in trade conflict with the U.S. for years. He says some stocks tied to domestic consumption may have been oversold, as a large local market and future stimulus measures may mean more room for growth.
Still, there might not be an end to the trade war unless Trump backs down, Ng says. But his administration vowed on Sunday to stay its course despite growing bipartisan objections. Countermeasures such as the ones from China, as well as those that might be planned by the European Union, might be the right responses, he says.
“To me, for any country, diversifying away from the U.S. is the only way forward,” Ng says. “Tell the U.S. this is not acceptable, then work with the rest of the world to create more trades ex-U.S.”
