Chinese stock markets and yuan plunge as Donald Trump returns to US presidency
By Deepu Mohan | First Published Nov 6, 2024, 4:38 PM ISTChinese stock markets and the yuan are plummeting due to Donald Trump's confirmed return to the U.S. presidency, sparking fears of escalated trade tensions. The blue-chip index dropped 0.27%, while Hong Kong's markets fell 2.5%, with Chinese tech companies like (link unavailable), Meituan, and Alibaba losing significantly.
Chinese stock markets and the yuan are facing significant declines as the return of Donald Trump to the U.S. presidency is confirmed. The blue-chip index dropped by 0.27%, while Hong Kong's markets saw a steeper fall, plummeting 2.5%. Hong Kong-listed Chinese tech companies were hit particularly hard, with e-commerce giant JD.com losing over 5%, and both Meituan and Alibaba dropping around 4%.
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The yuan also saw a sharp depreciation, falling 0.8% against the dollar, its weakest level since last August. The downturn is being attributed to fears that Trump's anti-China stance, particularly his threat to impose a 60% tariff on Chinese goods, could re-escalate trade tensions between the two largest economies.
The Chinese stock market, which had been showing signs of recovery with increasing foreign investment, is now facing renewed pressure with the possibility of Trump's return to the White House. In an effort to stabilize the yuan, China's central bank has been intervening by increasing the supply of dollars in the market.
Trump's tariffs, which previously targeted Chinese goods during his presidency, had a notable impact on the yuan back in 2018, causing a 5% drop. In addition to tariffs, the Trump administration also restricted Chinese telecom companies from operating in the U.S. China exports over $400 billion worth of goods to the U.S. each year, and the potential reintroduction of such policies under Trump's leadership could lead to higher inflation. This, in turn, could prompt the U.S. Federal Reserve to maintain high interest rates, further weakening other currencies.
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