China's stock market dips as panic among investors rises after Donald Trump's Iowa victory before US Election

Beijing has advised institutional investors to stay firm in China’s stock market after a rout took place on Tuesday. All three indexes in China bled after Republican Donald Trump won all counties in the Iowa state which has solidified his prospects of coming back to power.

China's stock market reacted negatively after Donald Trump's prospects for the US Presidency became more clear with a massive victory in Iowa. Investors especially in the Shanghai Index exited with their money as panic rose. China has been witnessing a stock rout for a couple of months but Tuesday’s bleeding was one of the worst days for China's market after the Evergrande crisis.

The Tokyo Stock Exchange overtook the Shanghai Stock Exchange a few days ago and has been going strong. Beijing has issued an advisor for the investors requesting them not to exit the market. The latest data suggests that the stock market in China is down by percent in January. Institutional Investors have been exiting the market due to regulatory issues.

However, the latest rout on all the three exchanges in China namely Beijing Stock Exchange, Shanghai Stock Exchange, and Shenzhen Stock Exchange are a result of Donald Trump. The former US President during his tenure at the White House enforced a trade war against China due to unfair trade practices and policies.

The US enforced tariffs on certain Chinese products while Beijing did the same. The trade confrontation resulted in massive losses for investors in the stock market. Now with Donald Trump winning every county in Iowa, his prospects of fighting the US election against incumbent Joe Biden is almost certain if not confirmed yet.

Under Joe Biden’s Presidency, Beijing has seen a lenient approach to relations with China. Joe Biden's government has not been as aggressive as Donald Trump which allowed the resumption of trade of various commodities in an increased manner. If Donald Trump comes back to power, he could reverse the lenient policies and begin a new phase of trade war against China.