Historic Slump in Hong Kong Stocks Amid US-China Trade War

Hong Kong stock markets faced their steepest decline since 1997 due to escalating U.S.-China trade tensions. Major indices, including the Hang Seng and CSI300, suffered as investors fled growth-related assets. China's response, involving its sovereign wealth fund, aimed to curb market instability amid looming economic repercussions.

On Monday, Hong Kong stocks registered their sharpest decline since 1997 after Beijing retaliated against U.S. tariffs with its own levies, exacerbating market tumult amid concerns over an expanding trade conflict. This downfall prompted China's sovereign wealth fund to step in to stabilize local shares.

The Hang Seng index plunged by 13.2%, marking the most significant one-day dip in over two decades, with sectors like technology, solar, and banking experiencing heavy losses. Investors withdrew rapidly from assets linked to global growth and trade. China's CSI300 index also fell 7% while Central Huijin, a state-backed entity, increased its holdings of Chinese stocks to mitigate market instability.

The yuan hit its lowest level since January, and the bond market showed a rapid rally. Facing more than 50% U.S. tariffs, China slapped additional levies on American imports. The prolonged dispute between these economic giants poses risks of disrupting trade flows and slowing global demand, already fragile amidst China's stumbling growth.

(With inputs from agencies.)