China stocks closed flat on Wednesday amidst cautious sentiment, while Hong Kong shares experienced a decline. This reaction comes despite a temporary easing in tariff threats announced earlier this month amid ongoing U.S.-China tensions. China’s blue-chip CSI300 Index closed down by 0.1%, and the Shanghai Composite Index remained flat.
Conversely, Hong Kong’s benchmark Hang Seng declined by 0.5%. Citic Securities analysts noted that market disruptions are unlikely to significantly affect investor risk appetite due to previous market consolidation and investors being seasoned by April’s volatility. They suggested that U.S.-China negotiations will likely continue in a tug-of-war phase, with low active capital positioning.
Olivier Blanchard, senior fellow at the Peterson Institute for International Economics, remarked at the UBS Asian Investment Conference that trade policies will not return to the pre-Trump era.
Market sentiment remains cautious
He indicated that free trade agreements typically take one to two years to decide and three years to implement.
In corporate news, shares of Xiaomi increased by 0.4% following the announcement of its record first-quarter revenue and profit. The company noted success in its strategy to shift towards higher-end products, including home appliances. However, shares of major electric car manufacturers continued to decline amid an intense price war in China’s auto industry, raising fears of an anticipated shake-out in the world’s largest car market.
BYD shares traded offshore fell by 2.7%, while Li Auto saw a drop as well. Tech majors listed in Hong Kong also decreased by 0.3%, and shares of mystery box maker Pop Mart International plunged by 7%, marking its largest one-day decline since early April. Overall, investor sentiment remains cautious as the market navigates through ongoing geopolitical tensions and economic uncertainties.
