Electric vehicle (EV) stocks in Hong Kong took a significant hit following the announcement of new tariff measures by US President Donald Trump. The global markets experienced a sell-off as a result of the news, with companies like BYD, Nio, Xpeng, and Li Auto all seeing a sharp decline in their stock prices.
At the time of reporting, BYD (HKG: 1211, OTCMKTS: BYDDY) was down by 11.15 percent to HK$333.00, Nio by 11.30 percent to HK$25.50, Xpeng by 11.40 percent to HK$72.25, and Li Auto by 10.82 percent to HK$86.95. The benchmark indexes in Hong Kong also suffered losses, with the Hang Seng Index falling by 9 percent and the Hang Seng Tech Index dropping by over 11 percent.
The decline in stock prices was triggered by Trump’s announcement of reciprocal tariffs on all trading partners, with China being targeted with an additional rate of 34 percent. This adds to the existing 20 percent tariffs imposed on China earlier this year, bringing the total new tariffs to 54 percent. In response, China announced retaliatory measures, including a 34 percent tariff on all imports of US products starting April 10.
Additionally, China’s Ministry of Commerce placed 11 US companies on its list of unreliable entities, effectively banning them from conducting business in China. This move, coupled with the escalating tariff war, has led to concerns about a potential shift in the global valuation system based on geopolitics.
Despite the challenges posed by the new tariffs, analysts believe that China’s stock market is better positioned to weather the storm compared to previous trade frictions in 2018-2019. The market’s performance in the medium term will be influenced by domestic economic fundamentals and policy responses. CICC noted that while the new tariffs will present a challenge to China’s economy, the stock market has more favorable conditions than in previous years.
As the trade war continues to unfold, global funds are expected to revalue assets based on geopolitical factors. It remains to be seen how this will impact the global economy and the automotive industry in particular. The evolving situation underscores the interconnected nature of the global economy and the importance of diplomatic relations in maintaining stability and growth.
