Stocks in China and Hong Kong Decline After the Wall Street Meltdown

Following Wall Street’s steep drops, China and Hong Kong stocks tumbled on Tuesday as mood soured throughout Asia. However, gains were restrained by a more positive perspective on the anticipated effects of artificial intelligence.

By lunchtime, the Shanghai Composite Index and China’s blue-chip CSI 300 Index had recovered some early losses but were still down 0.5%. After plunging as high as 2.1%, Hong Kong’s benchmark Hang Seng Index finished the morning session down 1%.

Tuesday saw a steep decline in Asian markets as a market purchase continued due to growing concerns that a broad trade war may impede U.S. economic growth and trigger a recession. Monday saw a sharp decline in U.S. markets, with the S&P 500 seeing its worst one-day decline in over three months.

“U.S. exceptionalism is at least pausing,” Citi wrote in a client note. “We therefore downgrade U.S. equities to neutral, upgrade China to overweight.”

In a jab at Trump’s “Make America Great Again” slogan, Pacific Securities claimed that American policies truly “Make Others Great Again”.”The brokerage stated that China’s tech-led bull run still has legs despite the recent drops.

“Sentiment toward the Chinese economy has continued to improve,” according to Goldman Sachs, despite Trump’s increase in tariffs on China. With an anticipated impact beginning in 2026, the bank has advanced its projection of the AI boost to China’s GDP growth. This week, money is shifting into cyclical companies after the recent spike in tech shares.

While tech shares in industries like robotics, chip manufacturing, and artificial intelligence (AI) declined after significant gains, China’s consumer, chemical, and banking equities increased due to persistent economic worries, tech shares and raw material equities in Hong Kong plummeted. “There are indications that the Chinese economy is improving. But according to Loomis Sayles, deflation won’t stop until 2025.

“Uncertainty persists about scale and effectiveness of stimulus” and “a U.S. tariff hike on Chinese products would pose more downside risks to China’s growth and inflation outlook.” This story was produced from an automatic news agency feed without any textual changes.