Hong Kong stocks fall from 4-month high as trade war fears grip markets

Investors see Trump’s tariff playbook causing inflation, which could force the Federal Reserve to keep interest rates higher for longer

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Pedestrians walk past an electronic board displaying the Hang Seng Index in Hong Kong. Photo: EPA-EFE

Published: 10:43am, 11 Feb 2025Updated: 4:50pm, 11 Feb 2025

Hong Kong stocks retreated from a four-month high on Tuesday, as caution prevailed after the US escalated a trade war by imposing tariffs on steel and aluminium imports, heightening geopolitical risks globally.

The Hang Seng Index fell 1.1 per cent to 21,294.86 at the close, the steepest in nearly three weeks. The Hang Seng Tech Index dropped 2.7 per cent, with the rally spurred by the ascent of artificial intelligence start-up DeepSeek taking a pause after the gauge entered a bull market last week on the back of a 20 per cent gain from a January low.

On the mainland, the CSI 300 Index dropped 0.5 per cent and the Shanghai Composite Index retreated 0.1 per cent.

Carmaker Geely Automobile Holdings and peer Li Auto tumbled at least 5 per cent after US President Donald Trump said that his administration would consider import duties on cars. Tencent Holdings and Alibaba Group Holding led the declines among top mainland Chinese tech companies trading in the city. Gold producer Zijin Mining Group bucked the downturn after the price of the precious metal rose to a record as investors shifted into haven assets.

Trump announced the tariff on Monday, with the rate set at 25 per cent, in addition to the 10 per cent levy on imports from China and 25 per cent duties on Canada and Mexico that have been paused for now. An announcement about reciprocal tariffs would be made on Tuesday, he added.

The tariffs could have a pronounced impact on the global economy, as the levies could entrench inflation in the US and delay interest-rate cuts by the US Federal Reserve, according to analysts.