EU unveils tariffs on Chinese EVs, causing Hong Kong stocks to decline

From South China Morning Post: 2024-07-04 23:00:24

Hong Kong stocks experienced their sharpest drop in a week after a four-day winning streak, as EV giants BYD and Li Auto led declines due to new EU tariffs. The Hang Seng Index fell 1.1% to 17,832.64, while the Tech Index weakened 1.8%. Shanghai Composite Index hit a five-month low with a 0.9% decline. BYD dropped 0.3%, Geely Auto tumbled 3.6%, Li Auto lost 3.3%, Xpeng tumbled 4.5%, and Nio dropped 2%.

European Union raised tariffs on BYD and Geely Auto by 17.4% and 19.9% respectively, on top of the existing 10% levy on Chinese electric cars. Additional duties of 20.8% to 37.6% were imposed on Li Auto, Xpeng, and Nio. Market response indicated disappointment as the hope for reduced tariffs was dashed.

Jason Chan, a strategist at Bank of East Asia in Hong Kong, noted that the EU’s stance remains stringent, possibly prompting other countries like Canada to follow suit. Hang Seng Index’s weekly gain slid to 0.6%, marked by mainland investment in high-yield stocks. The market anticipates more policy support from China’s Third Plenum next week.

Despite gains in Southbound buying reaching HK$10.5 billion this month, Hong Kong’s market struggles due to China’s uneven economic revival. Analysts believe a stronger catalyst is needed for market growth, possibly not until mid-July when detailed policies are revealed. In other news, Shandong Jianbang New Material saw a 139% jump in its IPO price on its first trading day in Shanghai.

Asian markets reacted variably as regional investors awaited a crucial US jobs data release hinting at a slowdown, potentially leading to a September interest-rate cut. Japan’s Nikkei 225 gained 0.3%, South Korea’s Kospi edged up 1.3%, and Australia’s S&P/ASX 200 fell 0.1%.



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