Hong Kong stocks saw a decline following the European Union's announcement of tariffs on Chinese electric vehicle (EV) imports. Analysts suggest there's still ample opportunity for both sides to avoid a significant trade conflict. This weak start risks ending a four-day streak of gains, with leading EV companies like BYD and Li Auto leading the downturn. The Hang Seng Index dropped 0.7 percent to 17,900.09 by 10:40 a.m. local time, while the Tech Index also weakened by 1.1 percent. Meanwhile, the Shanghai Composite Index fell by 0.6 percent, marking its lowest point in five months.
BYD's stock dropped by 0.6 percent to HK$233.20, while Geely Auto saw a significant decline of 3.7 percent to HK$8.38. This came after the European Union imposed increased tariffs of 17.4 percent on BYD and 19.9 percent on Geely Auto, in addition to the existing 10 percent duty on all-electric cars imported from China.
Li Auto's stock decreased by 1.7 percent to HK$79.40, while Xpeng experienced a significant decline of 3.7 percent, falling to HK$30.20. Nio also saw a drop of 1.2 percent to HK$37.15. These declines followed the imposition of additional duties ranging from 20.8 to 37.6 percent, which took effect on Friday and are initially set to last for up to four months.
Tencent gained 0.7 percent to HK$385, and Alibaba added 0.7 percent to HK$73.65 as the tech behemoths bucked the trend. Still, the Hang Seng Index has added 1.2 percent this week, the best gain in a month, as mainland investors sought diversification by targeting high-yielding stocks. In the new issue market, Shandong Jianbang New Material jumped 117 percent to 40.51 yuan per share on its first day of trading in Shanghai.
Most other Asian markets showed gains as investors focused on the upcoming release of crucial US jobs data. The data is anticipated to reveal a slowdown, potentially increasing the likelihood of an interest-rate cut in September. Japan’s Nikkei 225 rose by 0.2 percent, South Korea’s Kospi increased by 1 percent, and Australia’s S&P/ASX 200 saw marginal movement.