The prospect of a revived trade dispute between Washington and Beijing is threatening to undermine this year’s blistering rally in Chinese stocks and weigh on the yuan.
Global equities took a hit on Friday after US President Donald Trump said he would impose a “massive” increase of tariffs on Chinese goods.
He later said he would put an additional 100 percent tariff on China from Nov. 1, as well as place export controls on critical software.
Photo: Bloomberg
His reaction came after Beijing unveiled curbs on the export of rare earths earlier in the week.
A gauge of Chinese stocks listed in the US plunged more than 6 percent in its biggest loss since trade tensions escalated in April. US equities also tumbled, with the Dow Jones Industrial Average sliding 1.90 percent and the tech-heavy NASDAQ index shedding 3.56 percent on Friday.
“China’s markets will likely open under pressure Monday,” Karobaar Capital LP chief investment officer Haris Khurshid said. “The tariff headline and new tech restrictions will spook sentiment right out of the gate.”
A lasting deterioration of ties between the two largest economies could imperil one of the world’s best performing stock markets this year, as well as renew doubt over China’s investability, while any sustained weakness in the yuan is typically negative for Asian currencies, because the yuan has long been seen as an anchor for the region. On Friday, the Australian dollar, a so-called China proxy, sank 1.3 percent.
Whether the truce holds or collapses remains unknown, but the uncertainty might limit the impact on Chinese equities, Guotai Junan Hong Kong Ltd (國泰君安證券) chief economist Hao Zhou (周浩) said.
“I expect China’s markets to fall initially and then rebound with caution,” he said. “There are lot of questions left unanswered.”
Regardless of the risks posed by tougher talk between Washington and Beijing, Chinese equities were already looking overheated, Oberweis Asset Management Inc portfolio manager Barry Wang said.
The MSCI China Index of stocks capped its fifth month of gains last month, its longest winning streak since 2018.
“The China rally this year has run too far,” Wang said. “It might take a pause for fundamentals to catch up.”
In Taiwan, the TAIEX could also be under pressure when the main board resumes trading today after the Double Ten National Day holiday weekend, as the American depositary receipts of contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) tumbled 6.41 percent on Friday, even though the National Stabilization Fund remains in place, analysts said.
The Ministry of Finance on Thursday said the NT$500 billion (US$16.37 billion) fund would continue to intervene in the local stock market despite a significant rebound since it first entered the market in early April, citing uncertainties stemming from US tariff policies.
Additional reporting by CNA
GROWING OWINGS: While Luxembourg and China swapped the top three spots, the US continued to be the largest exposure for Taiwan for the 41st consecutive quarter The US remained the largest debtor nation to Taiwan’s banking sector for the 41st consecutive quarter at the end of September, after local banks’ exposure to the US market rose more than 2 percent from three months earlier, the central bank said. Exposure to the US increased to US$198.896 billion, up US$4.026 billion, or 2.07 percent, from US$194.87 billion in the previous quarter, data released by the central bank showed on Friday. Of the increase, about US$1.4 billion came from banks’ investments in securitized products and interbank loans in the US, while another US$2.6 billion stemmed from trust assets, including mutual funds,
AI TALENT: No financial details were released about the deal, in which top Groq executives, including its CEO, would join Nvidia to help advance the technology Nvidia Corp has agreed to a licensing deal with artificial intelligence (AI) start-up Groq, furthering its investments in companies connected to the AI boom and gaining the right to add a new type of technology to its products. The world’s largest publicly traded company has paid for the right to use Groq’s technology and is to integrate its chip design into future products. Some of the start-up’s executives are leaving to join Nvidia to help with that effort, the companies said. Groq would continue as an independent company with a new chief executive, it said on Wednesday in a post on its Web
RESPONSE: The Japanese Ministry of Finance might have to intervene in the currency markets should the yen keep weakening toward the 160 level against the US dollar Japan’s chief currency official yesterday sent a warning on recent foreign exchange moves, after the yen weakened against the US dollar following Friday last week’s Bank of Japan (BOJ) decision. “We’re seeing one-directional, sudden moves especially after last week’s monetary policy meeting, so I’m deeply concerned,” Japanese Vice Finance Minister for International Affairs Atsushi Mimura told reporters. “We’d like to take appropriate responses against excessive moves.” The central bank on Friday raised its benchmark interest rate to the highest in 30 years, but Bank of Japan Governor Kazuo Ueda chose to keep his options open rather than bolster the yen,
Even as the US is embarked on a bitter rivalry with China over the deployment of artificial intelligence (AI), Chinese technology is quietly making inroads into the US market. Despite considerable geopolitical tensions, Chinese open-source AI models are winning over a growing number of programmers and companies in the US. These are different from the closed generative AI models that have become household names — ChatGPT-maker OpenAI or Google’s Gemini — whose inner workings are fiercely protected. In contrast, “open” models offered by many Chinese rivals, from Alibaba (阿里巴巴) to DeepSeek (深度求索), allow programmers to customize parts of the software to suit their
RSS