Hong Kong Stock Market Sees Sharpest Drop Since 1997 Crisis Amid Tariff Concerns | Financial Markets Update

Benchmark Hang Seng Index plunges as much as 13.74 percent in a harrowing day for Asia’s markets.

Hong Kong’s stock market has experienced its most severe single-day drop in nearly three decades, driven by a wave of panic selling triggered by U.S. President Donald Trump’s tariff announcements.

The benchmark Hang Seng Index closed down 13.22 percent on Monday, after plummeting as much as 13.74 percent during the trading session.

This marks the sharpest decline for Hong Kong stocks since the index fell 13.7 percent in a single day during the 1997 Asian financial crisis.

During the worst day for Hong Kong stocks in the 2007-09 global financial crisis, the index dropped 12.7 percent.

The sell-off followed Trump’s reinforcement of his sweeping tariffs overnight, which he likened to “medicine,” and China’s announcement last week that it would retaliate with a 34 percent tariff on U.S. imports.

“Friday was a public holiday in Hong Kong, so what we’re seeing is the reaction to Trump’s tariffs and China’s retaliation. It’s a double whammy,” Carlos Casanova, a senior economist at UBP in Hong Kong, told Al Jazeera.

“To put this into context, previous retaliatory measures targeted less than 1 percent of China’s total imports. The magnitude of the latest measures is unprecedented,” Casanova said.

“We’re in uncharted territory.”

Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, noted that the performance of the Hong Kong market provides a more accurate reflection of investor sentiment regarding the impact of Trump’s tariffs on China’s economy compared to mainland Chinese stock markets.

“The point is you cannot trade freely in China. You cannot short Chinese stocks, but you can do all of that in Hong Kong. So it’s obviously reflecting what’s going on much better than Chinese stocks,” Garcia Herrero told Al Jazeera.

Hong Kong stocks were the worst performers on a bleak day for Asia’s markets overall, with equities in Japan, South Korea, Taiwan, Australia, and Singapore all experiencing significant declines.

Global stock markets have lost trillions of dollars in value since Trump announced sweeping tariffs on nearly all countries last Wednesday.

U.S. customs authorities began imposing a baseline tariff of 10 percent on imports on Sunday, with higher duties ranging from 11 percent to 50 percent set to take effect on Wednesday.

U.S. stocks have shed more than $6 trillion in value since Trump’s “Liberation Day” announcement.

Further steep losses are expected when Wall Street reopens on Monday, with futures tied to the benchmark S&P 500 and tech-heavy Nasdaq-100 down 2.7 percent and 3.55 percent, respectively.