Hong Kong led losses Monday, shedding more than 2%, while Shanghai was also down, along with Tokyo, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta
Asian markets dropped Monday after China’s eagerly anticipated plans to support the economy fell short of expectations, while traders were also keeping tabs on the U.S. as Donald Trump puts his cabinet together after last week’s election win.
Stocks rallied last week on hopes that a second Trump administration – supported by a Republican Congress – would push through a raft of business-friendly policies including deregulation and tax cuts, offsetting concerns about possible trade wars.
However, the mood changed after Beijing said Friday it would lift local government debt by $840 billion to help them clear so-called hidden debt, but fell short of announcing any new growth-boosting measures for the economy.
Hopes had been building all last week that officials would deploy a “bazooka” stimulus, the need for which was highlighted Sunday by data showing Chinese inflation slowed last month and came in below forecasts.
Authorities in late September began unveiling a raft of policies aimed at reigniting the economy, which has failed to fire since the lifting of Covid-fighting rules at the end of 2022.
Among them were interest rate cuts and an easing of home-buying measures as leaders try to address a crisis in the country’s property sector.
Friday’s announcement saw Chinese shares traded in New York plummet more than 4%.
And Hong Kong led losses Monday, shedding more than 2%, while Shanghai was also down, along with Tokyo, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta.
The selling came as investors ignored another record for all three markets on Wall Street, which was also helped by another Fed interest rate cut.
Observers said there were concerns about the impact of Trump’s planned tariffs, which he said would have a particular focus on China, fuelling the possibility of another trade war between the economic superpowers.
Pepperstone Group’s head of research Chris Weston said Beijing may have had an eye on this in its announcement.
Many feel that China is keeping its tactical powder in play for such time as the Trump-China tariff negotiations build, and they can respond in a more targeted fashion to stem the likely economic fallout, he said.
In the short-term, however, it does suggest downside risk to China/HK equity and the yuan, he said.
